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Germany and France, which account for half of Euro area GDP, is expected to surprise on the upside as growth picks up speed. Moreover, the lessening political risk in Europe, leading indicators like purchasing manager index, demand for loans and sentiment surveys all suggest that the market continues to improve.

“CoT large speculators currently maintain a net long position of 91,270 contracts on the euro, just off the 10-year high of 100,437 contracts set the week prior,” notes Schaeffer’s. “And while the current level of net long euro exposure is inarguably massive, it’s worth mentioning that earlier in 2007, peak net long euro positioning among large speculators topped out at 119,538 contracts. So, while this contingent is extremely net long at the moment, there’s still room for this trade to get even more crowded.”

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