EUR/USD, EUR/CHF at Risk as Overweight Europe & EM Positions Unwind

Crowded long positions in European and emerging market currencies are facing elevated risk of unwinding, placing EUR/USD, EUR/CHF, and USD/JPY in the spotlight. The analysis highlights that portfolio managers have built significant overweight exposure to European assets in recent months, and shifting macro conditions — including the energy price shock and deteriorating risk sentiment — are now threatening to reverse those flows. EUR/USD faces downside pressure as dollar demand picks up amid global uncertainty, while EUR/CHF could decline as the Swiss franc attracts safe-haven inflows. USD/JPY dynamics remain complex, with the yen caught between safe-haven appeal and Japan's worsening terms of trade from elevated energy costs. The US Dollar Index has firmed as positioning adjustments favor dollar accumulation. Near-term, traders should watch for key support on EUR/USD around recent lows and monitor capital flow data for signs of accelerating position liquidation in European and EM assets. Risk management is critical given the elevated volatility environment.