Hedge funds have ramped up their bets against the euro to a 2020 high
The rise in interest rates against the European currency is driven by concerns over the political and fiscal crisis in France and uncertainty surrounding the ECB's policy
The volume of hedge fund bets against the euro has reached its highest level since March 2020 amid political instability in France, according to data from the U.S. Commodity Futures Trading Commission (CFTC) cited by Bloomberg. During the week ending October 20, hedge funds’ net short positions in the euro rose by 1,305 contracts to 94,138. In monetary terms, they totaled approximately €11.8 billion ($13.2 billion).
The situation in France is putting pressure on the currency: lawmakers cannot agree on measures to reduce the country’s debt burden, and protests against the rising cost of living are escalating into clashes with the police. French authorities are preparing for new unrest this coming weekend.
Speculators have been holding short positions in the euro since February. This month’s volatility has heightened concerns about a slowdown in economic growth and raised doubts about whether the European Central Bank will raise interest rates—and by how much—which could widen the interest rate gap with the U.S.
Concerns that Moody’s would downgrade France’s credit rating amid a political and budgetary crisis also put pressure on the euro on Friday, Reuters reported. However, the agency maintained the country’s rating at Aa3 with a negative outlook, while S&P and Fitch had already downgraded their ratings back in the fall of 2025. The agency announced its decision after the markets had closed.
The euro fell against the dollar again this week: last week it halted a five-week decline, but the downward trend has now resumed. By the end of this week, the euro could lose 0.4% against the U.S. currency, according to Bloomberg.
This article was AI-translated and verified by a human editor
