The euro is losing luster with traders due to the ongoing energy crisis in the euro area. This year, its performance has been rather weak. Analysts believe that the single European currency will hardly be able to recover in the near future. Short selling of the euro has reached a new high since 2020.
Some FX strategist stress that the euro may become the biggest disappointment on Forex in 2022. Of course, the euro is facing strong bearish pressure because of the severe energy crisis and soaring gas prices. Traders are afraid of a recession in the EU and choose the US dollar as a safe-haven asset.
The US Commodity Futures Trading Commission (CFTC) revealed that the number of net short positions on the euro increased markedly in the last weeks of August. It means speculators are confident that the euro will maintain its downward movement. The euro/dollar pair has fallen by more than 14% since the start of this year. Last week, it hit a 20-year low. "The euro right now is just purely a function of the European energy shock. The biggest driver for the next couple of weeks involves what happens with [the] Nord Stream 1 [pipeline from Russia] and heightened gas prices," Mark McCormick, a global head of FX strategy at TD Securities, said.
