by Nicholas Hastings
Wall Street Journal
January 24, 2011
This latest wave of “eurphoria” should start hitting the rocks soon.
At the moment, the wave is skimming over the euro’s problems.
A widening in yield differentials over at the U.S. in the last two weeks, optimism over a more permanent solution to the euro-zone debt crisis and even increased interest from sovereign buyers have helped to drive the single currency back up to a two-month high against the dollar.
Data showing a sharp reduction in short futures positions earlier this month suggest that hedge funds and other speculators are also looking more favorably on the euro for now.
But, as figures from the Chicago Mercantile Exchange show, speculators are still only hedging their bets–showing little sign of actually increasing their long positions in the single currency just yet.
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