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Euro Faces a Potential Downturn as Hedge Funds Prepare for Parity
January 3, 2025 at 8:23 AM GMT+0

Euro Faces a Potential Downturn as Hedge Funds Prepare for Parity

The euro has commenced the new year on a concerning trajectory, with hedge funds projecting it might soon reach parity with the dollar or even lower. For more details, visit Yahoo Finance. As per data on the IndexBox platform, the leveraged funds in Europe and the US adjusted their euro options positions last Thursday when the currency fell to its lowest point since November 2022.

Bloomberg reports that approximately €2.5 billion worth of euro options, targeting parity and beneath, were exchanged on that day — nearly quadruple the previous month's daily average. The euro has faced a decline of about 1.5% this week, underperforming among its Group-of-10 peers due to apprehensions surrounding Europe's economic growth and potential tariffs from the US. Such selling momentum could escalate if the region's growth outlook continues to deteriorate, given that the euro remains one of the most liquid assets for trading.

"The balance of risks is indeed skewed towards the downside for the euro, especially as those option barriers around the 1.03 levels were breached," noted Christopher Wong, a strategist at Oversea-Chinese Banking Corp. The euro was priced at approximately $1.0274 on Friday after a significant drop to $1.0226 the previous session, marking a two-year low.

While the euro's negative sentiment has been maturing for some time, hedge funds have maintained bearish positions since late September, according to the Commodity Futures Trading Commission's data. Asset managers have similarly reduced their bullish stakes. Bloomberg strategist Mark Cranfield observed, "EUR/USD's path below parity is becoming clearer as big option positioning adds to negative momentum in the spot rate."

Forecasts from Rabobank, Wells Fargo, and Investec indicate that the euro may test parity against the dollar in the second quarter. This critical level was last surpassed in 2022 during the geopolitical upheaval, sparking an energy crisis in Europe and heightening fears of a downturn. Danske Bank analyst Mohamad Al-Saraf commented in a note, "Strategically, we stay bearish euro-dollar, targeting parity over the medium term."

Source: IndexBox Market Intelligence Platform

  1. 1. INTRODUCTION

    Making Data-Driven Decisions to Grow Your Business

    1. REPORT DESCRIPTION
    2. RESEARCH METHODOLOGY AND AI PLATFORM
    3. DATA-DRIVEN DECISIONS FOR YOUR BUSINESS
    4. GLOSSARY AND SPECIFIC TERMS

  2. 2. EXECUTIVE SUMMARY

    A Quick Overview of Market Performance

    1. KEY FINDINGS
    2. MARKET TRENDS This Chapter is Available Only for the Professional Edition PRO

  3. 3. MARKET OVERVIEW

    Understanding the Current State of The Market and Its Prospects

    1. MARKET SIZE
    2. CONSUMPTION BY COUNTRY
    3. MARKET FORECAST TO 2030

  4. 4. MOST PROMISING PRODUCT

    Finding New Products to Diversify Your Business

    This Chapter is Available Only for the Professional Edition PRO
    1. TOP PRODUCTS TO DIVERSIFY YOUR BUSINESS
    2. BEST-SELLING PRODUCTS
    3. MOST CONSUMED PRODUCT
    4. MOST TRADED PRODUCT
    5. MOST PROFITABLE PRODUCT FOR EXPORT

  5. 5. MOST PROMISING SUPPLYING COUNTRIES

    Choosing the Best Countries to Establish Your Sustainable Supply Chain

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    1. TOP COUNTRIES TO SOURCE YOUR PRODUCT
    2. TOP PRODUCING COUNTRIES
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  6. 6. MOST PROMISING OVERSEAS MARKETS

    Choosing the Best Countries to Boost Your Exports

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    1. TOP OVERSEAS MARKETS FOR EXPORTING YOUR PRODUCT
    2. TOP CONSUMING MARKETS
    3. UNSATURATED MARKETS
    4. TOP IMPORTING MARKETS
    5. MOST PROFITABLE MARKETS

  7. 7. GLOBAL PRODUCTION

    The Latest Trends and Insights into The Industry

    1. PRODUCTION VOLUME AND VALUE
    2. PRODUCTION BY COUNTRY

  8. 8. GLOBAL IMPORTS

    The Largest Importers on The Market and How They Succeed

    1. IMPORTS FROM 2012–2024
    2. IMPORTS BY COUNTRY
    3. IMPORT PRICES BY COUNTRY

  9. 9. GLOBAL EXPORTS

    The Largest Exporters on The Market and How They Succeed

    1. EXPORTS FROM 2012–2024
    2. EXPORTS BY COUNTRY
    3. EXPORT PRICES BY COUNTRY

  10. 10. PROFILES OF MAJOR PRODUCERS

    The Largest Producers on The Market and Their Profiles

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  11. 11. COUNTRY PROFILES

    The Largest Markets And Their Profiles

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    • United States
    • China
    • Japan
    • Germany
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    • France
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    • India
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    • Republic of Korea
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    • Switzerland
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    • Pakistan
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    • Algeria
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  12. LIST OF TABLES

    1. Key Findings In 2024
    2. Market Volume, In Physical Terms, 2012–2024
    3. Market Value, 2012–2024
    4. Per Capita Consumption, By Country, 2018–2024
    5. Production, In Physical Terms, By Country, 2012–2024
    6. Imports, In Physical Terms, By Country, 2012–2024
    7. Imports, In Value Terms, By Country, 2012–2024
    8. Import Prices, By Country Of Destination, 2012–2024
    9. Exports, In Physical Terms, By Country, 2012–2024
    10. Exports, In Value Terms, By Country, 2012–2024
    11. Export Prices, By Country Of Origin, 2012–2024

  13. LIST OF FIGURES

    1. Market Volume, In Physical Terms, 2012–2024
    2. Market Value, 2012–2024
    3. Consumption, By Country, 2024
    4. Market Volume Forecast to 2030
    5. Market Value Forecast to 2030
    6. Products: Market Size And Growth, By Type
    7. Products: Average Per Capita Consumption, By Type
    8. Products: Exports And Growth, By Type
    9. Products: Export Prices And Growth, By Type
    10. Production Volume And Growth
    11. Exports And Growth
    12. Export Prices And Growth
    13. Market Size And Growth
    14. Per Capita Consumption
    15. Imports And Growth
    16. Import Prices
    17. Production, In Physical Terms, 2012–2024
    18. Production, In Value Terms, 2012–2024
    19. Production, By Country, 2024
    20. Production, In Physical Terms, By Country, 2012–2024
    21. Imports, In Physical Terms, 2012–2024
    22. Imports, In Value Terms, 2012–2024
    23. Imports, In Physical Terms, By Country, 2024
    24. Imports, In Physical Terms, By Country, 2012–2024
    25. Imports, In Value Terms, By Country, 2012–2024
    26. Import Prices, By Country, 2012–2024
    27. Exports, In Physical Terms, 2012–2024
    28. Exports, In Value Terms, 2012–2024
    29. Exports, In Physical Terms, By Country, 2024
    30. Exports, In Physical Terms, By Country, 2012–2024
    31. Exports, In Value Terms, By Country, 2012–2024
    32. Export Prices, 2012–2024

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