The euro certainly isn't winning any popularity contests these days. A fragile growth outlook alongside surging energy prices and growing fiscal concerns in France has left traders with little reason to cheer for the single currency.And judging by the latest CFTC positioning data, leveraged funds aren't just turning their backs on the euro as well. They're practically racing each other to bet against it. But when a consensus trade becomes too heavy and one-sided, there's always the risk that it can get a little too crowded for comfort.That is precisely what MUFG is warning about in highlighting that speculative short positions in the euro have now reached their highest level since the Covid pandemic in early 2020. The latest CFTC positioning data shows that leveraged funds are holding a net short position of 78,559 euro futures contracts as of 3 November. That is up sharply from just 28,156 contracts in mid-September.MUFG notes that:"The recent unfavourable combination of higher energy prices and government borrowing costs particularly in France has reinforced euro selling pressure. The release of the latest IMM positioning report at the end of last week revealed leveraged funds are heavily short the euro."As mentioned, the bearish sentiment on the single currency isn't all too surprising. Europe's energy vulnerability has returned to be a hot topic amid the US-Iran conflict, with higher oil prices threatening to make the ECB's inflation headache even worse.Then you throw in surging borrowing costs in France and the picture gets even messier. Investors are now having to contend with fiscal uncertainty just as the region faces another potential hit to economic growth.That being said, MUFG does see some scope for relief if oil prices continue to ease amid hopes of de-escalation in the US-Iran conflict. The firm argues that the euro would be "vulnerable to a short squeeze in the near-term if the investor concerns over the scale of the energy shock continue to fade".Now, that doesn't automatically make the euro a good buy. It is best to remember that the underlying economic challenges haven't suddenly disappeared. However, the problem for euro bears is that they don't necessarily need to.With positioning already this stretched, even a modest improvement in sentiment could force leveraged funds to unwind their short positions. And that could potentially give EUR/USD a platform for a sharper bounce more than the fundamentals alone might justify.Despite the potential for some relief, MUFG is still maintaining its year-end target for EUR/USD at 1.12 though. So, that still does speak to their overall conviction on the euro even though there is scope for a positioning bounce.I would say that the next set of clues will come from whether oil prices stay lower, French-German bond yield spreads narrow further and the next CFTC report shows any meaningful short covering.With bearish positioning already at its most extreme since the Covid pandemic, I suspect the bigger risk for traders now isn't necessarily being wrong about the euro's outlook. It is more so being caught on the wrong side of the trade when everyone decides to head for the exit at once - even if temporarily. This article was written by Justin Low at investinglive.com.