Goldman Sachs: EUR Structural Positions May Be Turning

Goldman Sachs note that "the EUR continued to push higher vs. the USD
over the last week despite a pullback in risky assets, suggesting the rally
is as much about EUR-specific +ve (e.g., growth outperformance,
the Recovery Fund, and a cheap valuation) as it is about the global
cyclical rebound. The price action may also indicate that long-standing
overweights to USD assets are starting to come down. Euro length in
options appears to have picked up, but all measures of longer-term
positioning show little change to structural USD overweights/EUR
underweight. If European asset markets perform as-well or better vs.
US markets over the coming quarters, as we exp., the rotation out of
long-standing USD overweights should continue. Over the near-term,
markets will likely focus on any change in message from the FOMC at its
upcoming meeting. As long as signals from the committee are consistent
with further declines in US real yields the broad Dollar should remain
under pressure."