Hedge funds have significantly increased their bearish bets against the euro, reaching levels not seen since March 2020. The surge in short positions comes amid growing political instability in France, which has unsettled European markets and weakened the currency.
According to data from the Commodity Futures Trading Commission (CFTC) released on Friday, leveraged traders held about €11.8 billion ($13.2 billion) in bearish wagers on the euro in the week ending October 20. The net short positions rose by 1,305 contracts, bringing the total to 94,138 contracts, the highest since early 2020.
The escalating political turmoil in France appears to be the primary driver behind this shift in market sentiment. Investors are increasingly hedging against further declines in the euro as uncertainty persists.