Euro Gains Hinge on Domestic Demand, Says BNY

BNY's Geoff Yu notes that recent EUR/USD support has been driven mainly by cross-border investors reducing hedges following the European Central Bank's hawkish shift. This adjustment brought aggregate Euro holdings back to previous levels.

Yu emphasizes that sustained gains for the euro now depend on domestic demand rather than external hedging flows. Without a pickup in domestic demand, the euro's upside may remain limited.