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CoT Update: Euro & Oil Speculators Sell Aggressively

CoT Update: Euro & Oil Speculators Sell Aggressively

Paul Robinson, Strategist

CoT Highlights:

  • Large speculators reduce euro long for 2nd week in a row, smallest in 7 weeks
  • Crude oil large specs sell at most aggressive pace in 4 months
  • Futures positioning charts for other key FX-pairs and markets

The CoT report is longer-term sentiment indicator; for short-term sentiment indications see the IG Client Sentiment page.

The most recent Commitment of Traders (CoT) report reflected growing uncertainty in two of the most persistent trends since the middle of last year. Large speculators in both the euro and crude oil contracts unwound some of their record positioning at an aggressive clip. A development which could continue...

Every Friday, the CFTC releases the weekly report showing traders’ positioning in the futures market as reported for the week ending on Tuesday. In the table below, we’ve outlined key statistics regarding net positioning of large speculators (i.e. hedge funds, CTAs, etc.). This group of traders are largely known to be trend-followers due to the strategies they typically employ, collectively. The direction of their position, magnitude of changes, as well as extremes are taken into consideration when analyzing how their activity could impact future price fluctuations.

Key stats: Net position, one-week change, and where the current position stands relative to the past 52 weeks.

CFTC CoT data table

Large speculators net-long in euro smallest in 7 weeks

The record net-long position from a couple of weeks back was unwound for a second week in a row, bringing it to the smallest size since the final report of 2017. At 127.3k contracts it remains a very large position, historically, which if the price of the euro starts moving in reverse will have plenty of fuel to drive a decline.

On Friday, EUR/USD was rejected again from the 2008 trend-line we have been focusing on recently as an important inflection point. As long as it stays contained by this long-term threshold, then the outlook is neutral at best.

Chart 1 – Euro Positioning

euro cot positioning

Chart 2 – EUR/USD Monthly

EUR/USD monthly price chart, 2008 trend-line

Crude oil large specs sell at most aggressive pace in 4 months

Large specs reduced their net-long in oil by the largest number of contracts (-26.8k) since the October 13 report, where a similar-sized reduction took place. Oil positioning has been ballooning for the most part on an every week basis for the past four months.

With a fair amount of technical damage done during the earlier-month decline, it will be interesting to see if the bounce can maintain. Now appears to be as good a time as any since the rally began back in June for a meaningful lower-high and change in trend to appear. If we soon see this take shape, at 712k contracts long large specs have plenty to sell and drive prices lower.

To see how sentiment could tie into our outlook on FX pairs and markets, check out the DailyFX Q1 Forecasts.

Chart 3 – Crude Oil Positioning

crude oil cot positioning

Chart 4 – Crude Oil Daily

Crude oil daily chart, lower-high potential

Large speculator profiles for major FX & markets:

US Dollar Index (DXY)

CoT Update: Euro & Oil Speculators Sell Aggressively

British Pound

CoT Update: Euro & Oil Speculators Sell Aggressively

Japanese Yen

CoT Update: Euro & Oil Speculators Sell Aggressively

Swiss Franc

CoT Update: Euro & Oil Speculators Sell Aggressively

Canadian Dollar

CoT Update: Euro & Oil Speculators Sell Aggressively

Australian Dollar

CoT Update: Euro & Oil Speculators Sell Aggressively

New Zealand Dollar

CoT Update: Euro & Oil Speculators Sell Aggressively

Gold

CoT Update: Euro & Oil Speculators Sell Aggressively

Silver

CoT Update: Euro & Oil Speculators Sell Aggressively

Copper

CoT Update: Euro & Oil Speculators Sell Aggressively

S&P 500 (E-mini)

CoT Update: Euro & Oil Speculators Sell Aggressively

Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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