Weekly COT Analysis: EUR Shorts Highest Levels Since 2006

  • CFTC dat showed USD aggregated net long position increased 13.7% as traders took advantage of a pullback in the USD after the profit taking that was witnessed last week post the less hawkish FED meeting. Traders will be eyeing this week’s Non Farm Payroll data as another impressive number will likely boost the USD.
  • EUR net spec shorts increased 17.6% to 220,963 which is the largest level since June 2006.
  • JPY short positioning decreased a further 3.2% to 45,905 contracts.
  • AUD net short positioning increased 1.9% to 28,368 contracts.

EURUSD OutlookBearish

Summary:  Opposite to the Dollar’s story of a mid-week comeback, EURUSD took a beating into the second half of last week as longs were liquidated on the Dollar rebound. Concerns remain over Greece and elections in Europe are presenting a fragmented political picture which could manifest itself in many country’s national elections this year. This political uncertainty will not support EUR. Inflation data eyed along with ECB meeting minutes this week.

  • Strength active sell signal, at 2015 lows.
  • Index active sell signal, retests recent extreme lows.
  • Momentum active sell signal, bearish move from convergence continues
  • Order Flow Trader bullish

2015-03-30 13_09_28-

GBPUSD Outlook –  Bearish

Summary:  A low risk appetite is causing a reduction of investor inflows into the UK, keeping the currency weak. CPI printed a low of 0.0%Y highlighting the increasing risk of the UK dipping into deflation over the coming months. While this supported retail sales, we could see a shift in sentiment from the BoE. This coupled with the uncertainty surrounding Britain’s farcical political landscape should weigh on GBP. GDP data eyed this week.

  • Strength active sell signal, continues retreat from February highs
  • Index active sell signal, consolidates last week’s gains
  • Momentum active buy signal, bullish cross confirmed
  • Order Flow Trader Bearish

2015-03-30 13_09_28-

2015-03-30 13_24_37-Reuters - currency futures positioning

USDJPY Outlook – Bullish

Summary:  Another positive week last week for the Japanese currency which has benefited greatly from market’s risk aversion driven by uncertainty in the Middle East and equity market valuation. Accompanying this risk aversion inflow have been signs of reflation with wages picking up. The USD rebound weighed heavier on EUR than JPY due to JPY’s safe haven status. Medium term picture is still for Dollar strength to re-emerge

  • Strength active buy signal, consolidates pullback from recent highs.
  • Index active sell signal, at 2015 lows
  • Momentum active sell signal, continues to test 2015 highs
  • Order Flow Trader Bearish

2015-03-30 13_31_53-

2015-03-30 13_33_39-Reuters - currency futures positioning

USDCHF Outlook – Bearish

Summary:  Having fallen for the first half of the week on softer data, USD managed to stage a midweek resurrection and climb back to the weekly opening price as risk aversion kicked in seeing US Treasuries well bid. The softer data in line with last week’s dovish FOMC could see the USD lull continue a while longer but growth is expected to pick up soon and we are ever nearer to a rate hike, so over the medium term, USD strength should prevail. All eyes on Friday’s NFP’s.

  • Strength active buy signal, Continues to test 2014 lows
  • Index sell signal active, at 2015 lows
  • Momentum sell signal active, consolidates retreat from recent highs
  • Order Flow Trader bearish

2015-03-30 13_37_10-

2015-03-30 13_38_28-Reuters - currency futures positioning

AUDUSD Outlook – Bearish

Summary: Having rallied early last week driven by rebounding oil prices, the Australian currency fell late into the week as the Dollar rebounded. Overall the picture for the AUD remains that USD strength will re-emerge and see the currency fall once more in line with the longer term downtrend. Focus shifts towards next week’s RBA meeting.

  • Strength active sell signal, consolidates gains continues to 2015 highs
  • Index active sell signal, consolidates just below convergence levels
  • Momentum active sell signal, ticks up to closer test convergence levels
  • Order Flow Trader bearish

2015-03-30 13_41_22-

2015-03-30 13_42_39-Reuters - currency futures positioning

USDCAD Outlook – Bullsih

Summary:  The rebound in oil prices this week, driven by the escalating conflict in Yemen, saw commodity currencies rally, with the Canadian currency a grateful beneficiary. There is still the issue that loans made to the oil sector could come back and bite the Canadian banking sector and even with the prospect of US economic growth supporting the country, USD still remains the stronger buy. CAD GDP data eyed this week.

  • Strength active buy signal, consolidates pullback from 2015 highs.
  • Index active buy signal, continues to pullback from 2014 highs.
  • Momentum active buy signal, continues to pull back from highs.
  • Order Flow Trader bearish

2015-03-30 13_51_07-

2015-03-30 13_52_36-Reuters - currency futures positioning