Euro Shorts Decline from 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 have declined to the lowest level in 13 weeks after reaching a record in February. The USD may be about to embark on a corrective decline.

Euro

Euro speculative shorts declined from a record level (new records have been made nearly every week since February). Beware of a sharp recovery.

British Pound

British Pound speculative shorts have also declined from a record level. Beware of a sharp recovery.

Australian Dollar

AUD speculative longs are the lowest in 13 weeks after reaching an extreme level in April. This is bearish for the AUDUSD over the coming months.

New Zealand Dollar

The NZD COT index has declined from 100, indicating a turn from a sentiment (bullish) extreme. Favor the downside.

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 the lowest in 13 weeks after reaching an extreme level in April. This is bearish for the CAD over the coming months.

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 has turned from 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.