Nov 25 (Reuters) - Friday's EUR/USD collapse from 1.0498 to 1.0332 is telling about the future as it strongly suggested that few traders are well hedged for a move to the downside. The adjustment in hedging and betting that is clearly needed since the slump could lead to further sudden drops until this situation changes.

The plunge that followed PMI data, worse than expected but not far beyond the median forecast, was certainly abrupt and mainly resulted from stops below the 2023 low at 1.0448 and options around 1.0400.

These led to the sharp fall and there may well be similar and potentially much bigger interest at regular intervals on the downside. The reaction to any move below 1.0300, 1.0200, 1.0100 could be severe if it were to happen before traders can adjust, and given the rebound that has followed Friday's low, traders may be even less well prepared for a drop than they were on Friday morning.

A test of parity now would almost certainly result in a break resulting in a disorderly adjustment, and a swift move under 0.9902 which is the gateway to 2022's low at 0.9528 which was the lowest seen since 2002.

At this stage, few if any are ready for a move back to that point, let alone a quick return.

For more click on

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ EURUSD

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own, editing by Ed Osmond)

((jeremy.boulton@thomsonreuters.com))