Euro Speculative Shorts at Record Level

The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over a specific number of weeks (13). A reading close to 0 is bearish if the currency in question has reversed from a uptrend and is bullish if the currency has been declining for a significant amount of time. A reading close to 100 is bullish if the currency in question has reversed from a downtrend and is bearish if the currency has been rallying for a significant amount of time.

Readings of 95 and higher as well as 5 and lower are in boldfaced red type to indicate potential market extremes. For example, an increasing index is bullish until the index is extreme (near 100), at which time the risk of a reversal or pause in the trend increases.

US Dollar

Speculative USD longs reached a record level in February but the USD has continued to rally. Favor strength until another extreme is reached.

Euro

Euro speculative shorts are at a record level (new records have been made nearly every week since February). With the EURUSD testing the 2008 low, beware of a sharp recovery.

British Pound

GBP speculative shorts are also at a record level (the previous record was in late March at the previous low), so the British Pound may be close to a low.

Australian Dollar

AUD speculative longs are decreasing following the extreme levels that were reached in April. This is bearish.

New Zealand Dollar

The NZD COT index is at 100 again, which indicates extreme bullishness. This warns of a reversal.

Japanese Yen

Yen sentiment has turned from a bearish extreme (0). Turns from 0 lead to either consolidation before resumption of the downtrend or a bullish reversal.

Note-this is a chart of the Yen futures contract, not the USDJPY (the inverse of this chart would look similar to the USDJPY).

Canadian Dollar

CAD speculative longs are decreasing following the extreme levels that were reached in Apri. This is bearish.

Note-this is a chart of the CAD futures contract, not the USDCAD (the inverse of this chart would look similar to the USDCAD).

Swiss Franc

CHF speculative positioning is at a bearish extreme, which warns of a low.

Note-this is a chart of the CHF futures contract, not the USDCHF (the inverse of this chart would look similar to the USDCHF).

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum.  He is the author of Sentiment in the Forex Market.  Follow his intraday market commentary and trades at DailyFX Forex Stream.   Send requests to receive his reports via email to jsaettele@dailyfx.com.