{
  "id": 7786338,
  "title": "Euro: Recovery does not justify stronger EUR – BNY",
  "url": "https://urgent.news/2026/09/16/euro-recovery-does-not-justify-stronger-eur-bny",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-16T12:12:02.000Z",
  "source": {
    "name": "FXStreet",
    "slug": "fxstreet",
    "url": "https://www.fxstreet.com/news/euro-recovery-does-not-justify-stronger-eur-bny-202609161212"
  },
  "original_language": "en",
  "account": "BNY’s Geoff Yu contends that despite Eurozone growth and inflation risks being genuine, a long position in the Euro (EUR) may not be the optimal approach to express such views. He points out robust industrial data and fiscal support that benefit European assets, while emphasizing weak demand, the potential for ECB policy errors, and the currency’s high valuation. Yu suggests utilizing EUR-funded carry trades instead. Despite Europe's recovery being real and inflation risks present, a long EUR stance is misguided. Strong industrial and fiscal data favor European assets, but weak demand, policy errors, and a high EUR valuation cast doubt on the currency. The recovery is uneven; German services contracted to 48.5, confidence decreased, and output-price inflation declined for the third consecutive month. Across Europe, industrial demand, defense spending, and data-center investment are bolstering growth, yet the demand and core inflation factors are insufficient to support sustained EUR appreciation. EUR is currently heavily positioned, with cross-border hedges at nearly 60% below their yearly average. The recent dollar decline following the July FOMC has left investors significantly underhedged on Eurozone assets. With the EUR expensive and its rate differential against the USD still negative as the Fed escalates tightening, currency hedging should increase, even if allocations to Europe persist. The EUR remains overvalued, approximately 2% above its one-year BIS REER average; it is expensive in real terms but relatively cheap to borrow. Funding with EUR does not imply a negative outlook on the Eurozone. European equities can outperform alongside a weaker currency, while unhedged positions may suffer if REER normalizes. EUR-funded carry trades benefit from the same adjustment.",
  "summary": "BNY’s Geoff Yu argues that while Eurozone growth and inflation risks are real, being long the Euro (EUR) is not the best way to express this view.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}