A reversal maybe probable because Positioning data has been proven beneficial in anticipating future moves when positioning on a currency is at extended levels. What can happen is that when a bet is crowded the move is liable to fade and even reverse, often quite sharply.
For instance, the massive pro-Euro positioning could mean the drive higher in EUR/USD and EUR/GBP starts to fade as it becomes increasingly harder to find new market entrants to push the move onwards.
Why CAD expectations ?
At first, we looked for Canadian banks that have projected annualized per share growth (for the next three to five years) of more than 5%.
Additionally, the Canadian economy seems to be attracting investors’ attention of late because of the dazzling growth prospects it has to offer. The economy finally seems to have left behind the effects of the 2008-09 recession and the 2015 oil price collapse. Moreover, all the major banks delivered better-than-expected results in the last season. We expect the Canadian banking sector as a whole to further benefit from the improved economic conditions.
Conclusion : Short EUR/CAD