EUR/USD trades are stagnant, with hedge funds shifting focus.

Bank of America highlighted this week that demand for the EUR/USD currency pair has been notably stagnant. This assessment is based on the bank's private flow data, indicating that despite starting the week with a neutral market position, performance has been low. The bank's analysis noted that the market has yet to fully respond to the recent European Union reforms detailed in the note dated March 10, 2025.

From Monday to Wednesday, observed trading patterns revealed differing behaviors between hedge funds and real money investors. Hedge funds were seen selling USD and, to a lesser extent, EUR, primarily positioning themselves in favor of the Japanese Yen (JPY). This activity also included a decrease in long positions in the Norwegian Krone (NOK). Conversely, real money investors bought EUR, but not against USD. Early in the week, they were net buyers of USD while selling other G10 and emerging market currencies, with the British Pound (GBP) experiencing more significant sales. According to Bank of America, real money's EUR-USD positioning was still slightly short at the beginning of the week, which is noteworthy given these investors did not aggressively sell USD in the fourth quarter.

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