Asset managers are ramping up bullish euro positions to a five-month high, while hedge funds are scaling back short bets, reflecting a significant shift in sentiment toward the European currency, according to a report by Bloomberg.
According to Commodity Futures Trading Commission (CFTC) data, fund managers increased long euro positions to 262,759 contracts for the week ending 11 March, while hedge funds reduced their short euro positions to their lowest levels since October.
The move comes as Germany loosens fiscal constraints, pledging hundreds of billions of euros for defence and infrastructure, a policy shift that is prompting wider fiscal expansion across Europe. In response, Goldman Sachs, Deutsche Bank, and Société Générale have all revised their euro forecasts upward, citing stronger government spending as a catalyst for growth.
Goldman Sachs has revised its three-month euro forecast to $1.07 from $1.02, with the euro rising over 7% against the dollar since its February low, currently trading around $1.09.
At the same time, market confidence in the US dollar is waning, as Donald Trump’s economic policies fuel volatility in US markets. “If ‘diminished’ US exceptionalism gives way to ‘finished,’ the dollar can fall a long way, and the euro stands to be a key beneficiary,” Goldman strategists wrote. However, they cautioned that further euro gains may depend on additional weakness in the dollar.
Germany’s conservative leader Friedrich Merz recently reached a debt-funded spending agreement with the Green Party, overcoming a critical hurdle ahead of a parliamentary vote. If approved, the deal would accelerate Europe’s shift toward higher fiscal spending, reinforcing the euro’s momentum and potentially reshaping global currency markets.
