Hedge funds are taking increasingly larger bets against the euro, as the debt crisis in Europe continues to heat up.
A record number of hedge funds made so-called short bets, or wagers that the euro would weaken, according to the latest report from the Commodities
Future Trading Commission that tallied the data for the week ended May 29.
Citigroup's foreign exchange analysts said hedge funds spent nearly $36 billion betting against the euro during that week. Only $11.8 billion went toward bets on a stronger euro.
The euro is down 7% from April, currently trading around $1.24.
The euro will most likely continue to trend lower, but most experts don't expect a free fall. "It will drip lower [but] there will be no overnight collapse," said Douglas Borthwick, head of trading at currency trading firm Faros Trading.
Hedge funds and other investors are capping their bets on the euro's decline because they could get burned if European leaders intervene, according to analysts and traders.
