Covering the entire period of EUR trading since 1999, EUR/USD on average gains 1.8% in the final five weeks of the year. There is no clear consensus on why this bias exists with differing reasonings provided by market participants.

Certainly, some form of position squaring into the end of the years seems quite likely. Looking at the history of Leveraged Funds’ positioning in EUR for example does show a far greater proportion of the time positioning is short EUR. Roughly two-thirds of the time since the IMM Leveraged Funds data began in 2006, positioning has been short.

Two caveats are therefore worth mentioning in regard to this year. Firstly, the sharp rebound in EUR/USD in November could take away some of the scope for EUR upside in December and positioning right now shows modest long EUR.