BNP Paribas G10 FX positioning analysis signals

04 January,, London – For the first week of the new year, BNP Paribas has shared the latest data from its G10 FX positioning analysis signals model which measures the strength of a currency’s trend based on the G10 foreign exchange order positioning from the previous week.

G10 FX positioning analysis signals

G10 FX Positioning Analysis signals

Analysis and commentary

The G10 FX positioning analysis shows that markets continue to increase GBP short positions most likely due to political uncertainty around the EU referendum coming into play. Meanwhile, EUR positioning remains fluctuating relatively neutral at +2, on a scale from -50 to +50. “The large ‘client exposure’ and ‘IMM’ short exposure continues to be offset by the extreme risk reversal bullish reading,” BNP Paribas projected.

Adding to this case, the CrowdTrading insights warn traders to watch out for the UK Trade Balance, which is to be announced on Friday at 09.30 GMT. These insights project that the forecast will be at -10.5B. On the other end of the spectrum, CAD remains in heavy net short territory on the back of cheap crude oil. The Canadian Dollar shorts are estimated at -35, close to peak short exposure seen on Aug 2015 at -40.

EURUSD and GBPUSD technical signals

While downward momentum in EURUSD is not strong, confirming  BNP Paribas position analysis, United Overseas Bank (UOB) argues that the current weakness has scope to extend lower to test the support near 1.0800/05 area.

"While the outlook for EUR is bearish in the coming days, any weakness is expected to struggle to move below the major support near 1.0800/05,” UOB noted.

Overall, UOB added that only a move back above 1.0945 resistance would indicate the current downward pressure has eased.

Consider reading: Societe Generale – EURUSD still at parity

Moving on to GBPUSD, UOB notes that the current bearish phase is yet incomplete and is expected to move lower to 1.4600 in the coming days, aligning with the view set by BNP Paribas analysis.

"Downward momentum is still strong and any GBPUSD rebound is expected to encounter stiff resistance near 1.4760 but only a break above 1.4840 would indicate that the bearish phase has ended," UOB added.

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