Hedge fund bets against euro hit record Europe's common currency is expected to stay under pressure as data indicated a new record amount of hedge fund bets against the euro, which fell to a near two-year low against the US dollar last week. Mounting concerns over Spain's fiscal and economic health, coupled with fears that Greece could exit the eurozone, have ended the euro's surprising resilience for much of the continent's sovereign debt crisis, with the currency shedding 6.6 per cent against the US dollar in May, the most in eight months. Although the euro edged up against the US dollar for a second day on Monday - largely thanks to dismal US jobs figures late last week - funds have piled on more bets against the currency, according to data from the Commodity Futures Trading Commission in the US, released late on Friday. The number of short positions in the euro - where investors benefit from a decline in prices - increased by 13,627 contracts in the week ending May 29, outweighing long positions by a record 203,415 contracts. The value of the contracts is not disclosed. "We're entering uncharted territory," said Philippe Meyer, head of foreign currency and rates research for corporates at Société Générale. He added that the extent of short positions was "increasing week by week, and we'll probably have another record next week. The bearish sentiment against the euro is likely to continue. Europe is facing another testing week, after fears over Spain's deteriorating economy and banking sector and the looming elections in Greece this month rattled global sentiment and sent investors fleeing into the safest assets. Investors will be looking for clues on possible policy maker action at the European Central Bank's meeting on Wednesday, but many are becoming increasingly pessimistic on Europe. The CFTC data on "non-commercial" positioning capture only a small part of positions in the euro market - one of the largest and most liquid in the world - but are considered a proxy for the views of the investment industry, particularly US-based hedge funds. Even including commercial and "non-reportable" contracts, the CFTC data indicated a total net short position of 246,898 contracts in the week ending May 29. Central banks in emerging markets, which are major players on global foreign exchange markets, have added to the headwinds as they dump the euro to shore up their own currencies. "The crisis is putting pressure on the euro more quickly than we had previously expected," Ulrich Leuchtmann, an analyst at Commerzbank, said in a note. Analysts and economists expect the euro to stabilise at around $1.26 against the US dollar by the third quarter of this year, according to the median estimate of 56 banks and brokerages surveyed by Bloomberg, before rising modestly to $1.27 by the end of the year.