Recent European economic data shows an increased probability of a weaker Euro over the coming weeks

Over the last 10 years, Citigroup’s Eurozone economic surprise index turned negative for a prolonged period 9 times, while in 6 cases EURUSD turned negative as well. Since mid February 2018, the economic surprise index has moved into negative territory which increases the probability of seeing a weaker Euro in the coming weeks.

This view is further supported by the fact that net EUR long holdings are still at a historical extreme level which suggests that the recent Euro strength could come to an end.