The market remains braced for a weak Euro macro backdrop to extend into early 2024, as lacklustre Chinese data is far from helpful for the manufacturing sector. However, we would note the impact of weak data on EUR performance has moderated, in part as negativity is already discounted. 

However, as implied spread dynamics move against the EUR, we can expect real money players to further unwind excessive EUR longs. Although real money players may have almost halved EUR holdings from early August highs a further consolidation underlines the presumption of fresh 2023 EUR/USD lows prior to year-end. 

EUR/USD – Q4 2023: 1.03 | Q1 2024: 1.03