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CoT Highlights:

  • Euro large speculators reduce to smallest position since December
  • At 120k contracts, the net-long position is still quite large
  • More selling could be on its way with technical levels broken

For a measure of short-term sentiment readings, see the IG Client Sentiment page.

The most recent CoT report showed a few material changes, but of most interest right now is the euro. Large speculators have held a large long position since late last year, suggesting at some point if EUR/USD broke support levels there could be plenty of fuel to drive the euro lower.

Every Friday, the CFTC releases a weekly overview of traders’ positioning in the futures market as reported for the week ending on Tuesday. In the table below are key statistics for 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. The direction of their position, magnitude of changes, as well as extremes are taken into consideration when analyzing what their activity could mean about 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

Reduction in euro holdings set to continue

Friday’s report showed an additional 10k contracts sold after a reduction of 20k contracts the week before. This has net positioning in the euro-FX contract down to +120k, the lowest level since December. However, by historical measures this is still a large position and a further unwind in the weeks ahead could unfold as the uptrend starting last year is coming under fire.

As we noted nearly a year ago, large speculators in the euro have a solid track record of identifying intermediate to long-term trends, and with that in mind the trend-following group is now seeing additions in recent months show losses. The trend could be changing with the euro below the 2017 high, the 200-day, and down on the year.

On that, a larger shift in positioning could drive the euro lower. Even if the trend from last year can remain intact, it looks likely the shakeout will continue before a low is put in place. If we pull back further to the weekly chart, it’s possible EUR/USD is in the process of reasserting the long-term downtrend off the 2008 peak.

See how sentiment could tie into the Quarterly Forecast for the Euro

Chart 1 – Euro Positioning

euro cot large speculator positioning

Chart 2 – EUR/USD Daily (A lot of technical damage)

EUR/USD daily price chart, technical damage suggests lower prices

Chart 3 – EUR/USD Weekly (Reasserting long-term trend?)

EUR/USD weekly price chart, long-term downtrend looking to resume?

Large speculator profiles for major FX & markets:

US Dollar Index (DXY)

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Euro

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

British Pound

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Japanese Yen

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Canadian Dollar

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Swiss Franc

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Australian Dollar

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

New Zealand Dollar

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Gold

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Silver

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Copper

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Crude Oil

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

S&P 500 (E-mini)

CoT Update – Euro Speculative Long Shrinking, but Plenty More to Sell

Resources for Forex & CFD Traders

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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