CFTC data for the eurozone show EUR non-commercial net positions at 41.3K. This is up from 26K in the previous report.
We are seeing a significant increase in bullish sentiment for the Euro, with speculative net long positions jumping to €41.3 billion from €26 billion. This is a strong signal that large traders are positioning for the Euro to appreciate in the coming weeks. This is the largest weekly increase in net long positions we have seen in over six months.
This shift likely reflects the divergence in central bank policy that is becoming more apparent. Recent Eurozone inflation data came in slightly above expectations at 2.7%, fueling beliefs that the European Central Bank will delay any potential rate cuts until later this year. Meanwhile, the latest US jobs report showed a modest cooling, which keeps a potential summer rate cut from the Federal Reserve on the table.
Looking back, we remember the market sentiment in late 2025 when similar economic data divergences began to appear. That period was followed by a sustained rally in the EUR/USD exchange rate from 1.05 to 1.09 over the following quarter. The current build-up in speculative longs suggests the market may be positioning for a repeat of that performance.
For traders, this points towards establishing long Euro positions through derivatives. Buying EUR/USD call options with June and July 2026 expiries provides a defined-risk way to capitalize on a potential upward move towards the 1.10 level. The current low implied volatility makes option premiums relatively inexpensive.
It is also wise to monitor the volatility markets for signs of a breakout. The Euro Stoxx 50 Volatility Index (VSTOXX) has been trading near its historical lows, suggesting complacency in the market. An increase in speculative positioning like this often precedes a pickup in volatility, which could present opportunities for traders using straddles or strangles.
