FX Futures Positioning: US Dollar, EUR/USD, GBP/USD | COT report

Speculative positioning across major FX futures is sending mixed signals. While traders have trimmed net-short exposure to the US dollar, large speculators have swung back to net-short US Dollar Index futures, highlighting a growing divergence beneath the surface. At the same time, shifts in EUR/USD and GBP/USD positioning suggest conviction behind recent dollar weakness may be fading.

View related analysis:

COT Report: FX Futures Positioning for the US Dollar, EUR/USD and GBP/USD

Large Speculator Positioning from the COT report

Source: CFTC (COT), LSEG

US Dollar: Futures traders collectively trimmed their net-short exposure to the US dollar by $3.2 billion to -$19.6 billion.

EUR/USD: Gross longs declined among both large speculators and asset managers, pulling net-long exposure lower from multi-year highs.

GBP/USD: Traders increased their net-short exposure to the British pound for a third consecutive week. Asset managers’ gross shorts rose to a 3.5-year high, pushing net-short exposure to 110k contracts — just 2.5k contracts shy of a record high.

USD/JPY: Both sets of traders remained net-long Japanese yen futures, although asset managers trimmed their exposure by 10k contracts. The weekly change was flat among large speculators.

USD/CHF: Asset managers were net-short the Swiss franc by 55.2k contracts, fewer than 500 contracts from a record high.

USD/CAD: Large speculators increased their net-long exposure to Canadian dollar futures to a 4.5-year high. Gross longs rose to a nine-year high.

AUD/USD: Asset managers were net-long Australian dollar futures for a second week, at their most bullish level since October 2022. Large speculators increased their net-long exposure for a fifth consecutive week after flipping from net-short five weeks ago, and are now at their most bullish since October 2017.

NZD/USD: Net-short exposure declined to a 20-week low among large speculators as shorts fell and longs increased. However, asset managers trimmed both longs and shorts.

Asset Manager Positioning | COT Report

Source: CFTC (COT), LSEG

FX Futures Positioning | COT Report (IMM Data)

US Dollar Index (DXY) Futures Positioning | COT Report

Divergences across the US dollar persist. Traders reduced their exposure to US dollar futures by $3.2 billion last week, taking the total net position to -$19.6 billion. This suggests sentiment towards the US dollar shifted two weeks ago and potentially builds a case for a stronger greenback. Possible catalysts include geopolitical tensions in the Middle East and resilient US economic data dampening expectations of a single Fed cut this year.

However, large speculators reverted to net-short exposure on US dollar index futures last week after a one-week shift to net-long. Asset managers also remained net-short US dollar index futures, albeit not by an extreme margin.

With gross longs in EUR/USD futures continuing to decline and shorts edging higher, a more bullish US dollar outlook cannot be ruled out.

Source: CFTC (COT), LSEG

EUR/USD Futures Positioning | COT Report

We’re finally seeing a meaningful pullback in bullish euro bets, with net-long exposure declining by 36k contracts among large speculators and asset managers last week. The move was largely driven by long liquidation across both groups.

Short positions rose by 2.8k contracts (2.1%) among asset managers and by 1k contracts (0.7%) among large speculators.

We’ll need to see a stronger build-up in short exposure before assuming a deeper pullback in EUR/USD. But if that materialises, it would support the broader theme of an oversold US dollar — particularly given the euro accounts for around 57% of the US Dollar Index weighting.

Source: CFTC (COT), LSEG

GBP/USD Futures Positioning | COT Report

Net-short exposure against the British pound has continued to rise while GBP/USD fall, though asset managers have the more bearish view. Their net-short exposure now sits at 110k contracts, just 12k shy of a record high. Furthermore, they are simultaneously increasing short bets while trimmings longs.

While large specs also increase their net-short exposure, it was only just 57k contracts and nowhere near a record high. Gross-shorts were also flat on the week, though elevated. Meaning their increase of net-short exposure was driven by closure of longs, not bets against the pound.

Still, one could argue that GBP/USD prices remain elevated relative to the bearish exposure of both trader groups, which means prices may need to fall to justify their positioning or risk sending the pound higher upon short covering.

Source: CFTC (COT), LSEG

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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