FX Futures Positioning: USD, EUR, GBP, JPY | COT report

The latest Commitment of Traders (COT) data highlights a shift in FX futures positioning as geopolitical tensions and diverging central bank outlooks shape market sentiment. Traders continued trimming aggregate exposure to the US dollar while large speculators reduced euro longs, built bearish bets on the pound and increased short exposure to the Japanese yen.

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COT Report Shows Shifts in USD, EUR, GBP and JPY Futures Positioning

Large Speculator Positioning from the COT report

Source: CFTC (COT), LSEG

The US dollar continued to strengthen last week amid geopolitical tensions from the Middle East. Recent Commitment of Traders (COT) data shows futures traders reduced their aggregate exposure to the US dollar for a third consecutive week, falling $7.4 billion to a seven-week low of $5.7 billion.

US Dollar: Asset managers increased their net-long exposure to the US Dollar Index to a 15-week high of 7.1k contracts.
EUR/USD: Net-long exposure continued to plunge, falling 31.5k contracts among large speculators to mark its fourth consecutive weekly decline.
GBP/USD: British pound futures traders increased their net-short exposure for a fifth consecutive week, reaching a 15-week high of 84.2k contracts.
USD/JPY: Large speculators and asset managers reduced net-long exposure by a combined 40k contracts.
USD/CAD: Net-long exposure to Canadian dollar futures (CAD/USD) rose by a combined 23k contracts across both groups of traders.
AUD/USD: A reduction in long positions saw net-long exposure among large speculators decline for the first time in six weeks.
NZD/USD: Asset managers increased net-short exposure for a fourth consecutive week, reaching a six-week high of 37.4k contracts.

Asset Manager Positioning | COT Report

Source: CFTC (COT), LSEG

FX Futures Positioning | COT Report (IMM Data)

US Dollar Index (DXY) Futures Positioning | COT Report

Net-short exposure to the US dollar continued to decline, with aggregate futures exposure falling $7.4 billion to a six-week low of -$5.7 billion. This marks the third consecutive week of net-shorts being reduced, with the $17.1 billion reduction over the past three weeks marking the most aggressive three-week culling since November 2024.

Asset managers increased their net-long exposure to a 14-week high of 7.2k contracts, with the 0.2k increase marking the largest weekly rise since August 2023. This came as 2.5k long contracts were added while 3.6k short contracts were closed.

Large speculators continued to increase their net-short exposure despite the stronger dollar, with the US Dollar Index pushing back above the 100 handle.

Source: CFTC (COT), LSEG

EUR/USD Futures Positioning | COT Report

Net-long exposure to euro futures fell from its 3-year high for a fourth consecutive week among large speculators. While gross-shorts have risen modestly over this time, it has largely been a culling of longs that ha dragged net-long exposure lower. Specifically, they closed -28.9k long contracts last week (-9.8%) to make the fastest weekly reduction of bullish bets since January 2023.

We can see on the weekly chart that EUR/USD has fallen quite sharply over the past two weeks, which simply feeds back into the bullish narrative for the US dollar index – given the euro accounts for 57% of the USD basket’s weighting.

Source: CFTC (COT), LSEG

GBP/USD Futures Positioning | COT Report

It remains open to debate whether British pound positioning is approaching a sentiment extreme. Asset managers trimmed their net-short exposure from a record high, while large speculators increased their net-short exposure for a fourth consecutive week, bringing positioning close to its most bearish level since 2019.

We may have a clearer answer after this week’s Bank of England (BOE) meeting. While markets broadly expect the central bank to hold interest rates, the tone of the guidance and perceived dovishness could prove a key driver for GBP/USD in the near term.

Source: CFTC (COT), LSEG

USD/JPY Futures Positioning | COT Report

Asset managers were on the cusp of flipping to net-short exposure to the Japanese yen last week, with gross bullish exposure falling to just 2.8k contracts – the lowest since January 2025, when traders were last net short.

What makes this more notable is that the shift was driven by long positions being reduced while short exposure increased, rather than simply a reduction in longs alone.

The combination of a less bearish outlook for the US dollar and stronger short exposure toward the yen points to the potential for higher USD/JPY, which could lead to tougher discussions for the MOF and BOJ regarding potential intervention.

Gross shorts in yen futures increased by 10.5k contracts (20.2%), marking the fastest weekly rise since November 2024 and the third consecutive weekly increase.

Gross longs now sit at 62.2k contracts, around a 14-month high, though positioning remains well below sentiment extremes.

Source: CFTC (COT), LSEG

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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