FX Futures Positioning: Yen, Euro Bears Caught Short | COT report

This week's COT report highlights just how extended futures traders had become on bearish euro and Japanese yen positions, heading into the extreme levels of volatility seen on Thursday and Friday. The US and Japan have now confirmed they jointly intervened to support the yen, marking the first coordinated currency operation between the two countries since 2011. The announcement lends greater credibility to the latest rebound in the Japanese currency and raises the bar for traders betting against it.

What makes the latest round of MOF intervention slightly comical is that most traders had all but given up on it happening. Yet what makes this episode more powerful is that Japan now appears to have explicit US backing. Treasury Secretary Scott Bessent has suggested the US could facilitate future interventions by expanding the Fed's repo facility to provide additional dollar liquidity. Those comments arguably carry more weight than the intervention itself. We've already seen this year's interventions fully reversed, but signalling that the US is prepared to support Japan's efforts strengthens the case that the yen has indeed bottomed. It may not be Plaza Accord 2, but it is the strongest signal of US-Japan policy coordination on the yen in decades.

 

 

 

FX Futures Positioning: COT Report Shows Yen and Euro Bears Under Pressure

Large Speculator Positioning

Source: CFTC (COT), LSEG

 

• US Dollar: Bullish bets reached an 11-year high of $48.5 billion heading into the FOMC meeting
• EUR/USD: Net-short exposure reached a 20-month high of 72.5k contracts among large speculators
• GBP/USD: Asset managers net-short exposure rose to 141k contract, 5k short of a record high
• USD/JPY: Gross-shorts among large speculators and asset managers neared their record highs, ahead of the MOF intervention
• USD/CHF: Net-short exposure to Swiss franc fell to an 8-week low among large specs
• USD/CAD: Exposure remains flat for the week, though net-shorts remained near bearish extremes with percent rank at 0% on 3-month and 1-year lookback
• AUD/USD: Prices and positioning continued to divergence, with net-short reaching a YTD high among large specs despite AUD/USD rising for a fourth week.

 

Asset Manager Positioning

Source: CFTC (COT), LSEG

 

 

 

 

 

 

FX Futures Positioning | COT Report (IMM Data)

US Dollar Index (DXY) Futures Positioning | COT Report

Futures traders continued to pile into long US dollar positions, pushing net-long exposure to an 11-year high of $48.5 billion, less than $3 billion shy of the all-time record. I've been ringing the alarm bells for several weeks that sentiment had reached an extreme, and last week's bearish engulfing candle suggests a top may now be in place.

That said, the US Dollar Index has so far found support around its 200-day EMA and January trendline on the daily chart. While the broader bias may be turning lower, this support zone could allow for a near-term bounce before losses potentially resume.

Source: CFTC (COT), ICE, LSEG

 

 

EUR/USD Futures Positioning | COT Report

Bearish bets against the euro accelerated to a record high among large speculators and managed funds last week. Not that it did them much good, considering EUR/USD finished the week strongly following a less hawkish-than-expected FOMC meeting and an intervention-linked selloff in the US dollar.

Net-short exposure reached a 20-month high of 72.5k contracts. While asset managers remained net-long by 209k contracts, their bullish exposure had fallen to its lowest level since February 2025.

How far EUR/USD can extend its rebound is likely to depend on whether traders continue to embrace the combination of a less hawkish Fed and Japan's intervention-backed support for the yen. As buying yen requires selling US dollars, the euro stands to benefit indirectly if broad USD selling persists.

Source: CFTC (COT), CME, LSEG

 

 

 

USD/JPY Futures Positioning | COT Report

Gross short positions among large speculators and asset managers rose to just shy of record highs last week. This underscores how convinced futures traders had become that no further intervention was coming. Yet the FOMC meeting provided the catalyst for the MOF to intervene and strengthen the yen on Thursday, before the move was reinforced by US Treasury support on Friday. Needless to say, yen bears were scorched.

The weekly yen chart shows a sharp bullish rally last week followed by another gap higher today. With the US now backing Japan's intervention efforts, I'm more confident in saying that the Japanese yen may have printed its cycle low for the year.

Source: CFTC (COT), CME, LSEG

 

 

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge