IFR Euro Outlook: Inertia may rule before CBs but bearish momentum is starting to pick up

...Worse is how the inertia before next week’s central bank meetings makes it hard to judge positioning and potential price action. At least aside from the suggestion that objects at rest tend to stay at rest; in other words, expecting the lazy drift to continue is at least as good a guess as any other.

Indeed, after rallying almost non-stop from the start of the year, it would have been tempting to suggest the market had got itself a bit long. The correction at the end of last week, however, ought to have cleaned out those excess longs.

An interesting case can be made, however, that the market is short. This seems strange to say after the rally which covered the first half of the month, but the notion that real money accounts may be caught short their bogeys has something to it. If nothing else, the market appeared to have traded a bit short at times this week (during Wednesday’s half-hearted rally), if not from the start of the year.

Possibly, but we wouldn’t hang our hat on it, not with the latest trade being down as seen yesterday and again overnight...