Weekly COT Analysis: USD Longs Pared


  • CFTC COT Data: USD aggregated net long positions decreased 1.5% to $39.2bln as traders reduced long USD bullish bets as a dovish FED and weaker economic data weigh on rate move expectations
  • EUR net spec shorts decreased from 215,258 to 212,347 contracts this week a decrease of 2.8%.
  • JPY short positioning decreased 5%.
  • AUD net shorts increased a further 5% from last week’s 66% jump as positions are adjusted into this week’s RBA minutes release


 EURUSD  Outlook – Bearish

Mario Draghi reiterated his commitment to running the ECB’s QE program through to September 2016. Low interest rates and the accommodative monetary policy have made EUR a firm funding currency favourite. As political tension stemming from Greece continue, EUR should remain pressured near term.

  • Strength active sell signal, ticking up from extreme lows.
  • Index active sell signal, continues to tick up from lows
  • Momentum active buy signal, long positions in play.
  • Order Flow Trader bullish


GBPUSD  Outlook – Bearish

A much stronger week last week for the UK currency which has benefited greatly from the USD unwind. This week’s CPI print showed that the UK has not in fact dipped into deflation but downside risks remain. The forthcoming BoE minutes releases is likely to highlight some members’ concerns about the economy, in tandem with the continuing political risks surround the UK election, pressure should re-emerge on the currency.

  • Strength active sell signal, ticks down from last week’s gains
  • Index active sell signal, retreats further from April highs
  • Momentum active buy signal, pulling back from April highs
  • Order Flow Trader bullish


USDJPY  Outlook – Bullish

Price remains trapped in the near term due to a strange dichotomy currently experienced. Japanese investors became the largest holders of USTs outside of the US but simultaneously foreign investors have flooded Japanese markets. JPY does remain strong on the crosses however.

  • Strength active buy signal, continues to decline from January highs
  • Index active sell signal, at 2015 lows
  • Momentum active sell signal, consolidates last week’s gains
  • Order Flow Trader bearish


USDCHF  Outlook – Bearish

Data weakness set the tone of last week for the Dollar which saw some further unwinding. The data dependant stance of the Fed negates any reason for USD bullishness until this data soft-patch comes to an end. Growth differentials are still supportive of USD trading outlook but many players are playing the wait and see game now, monitoring potential SNB intervention as they seek to stem any volatile CHF appreciation.

  • Strength active buy signal, consolidates recent declines
  • Index sell signal active, consolidates recent gains from depressed levels
  • Momentum sell signal active, ticks down from March highs
  • Order Flow Trader bearish


AUDUSD  Outlook – Bearish  

Another happy beneficiary of the USD unwind, the Australian currency has enjoyed a much better week and with a strong employment report there is decent scope for price to remain positive near term. RBA minutes and quarterly CPI will be the next hurdle.

  • Strength active sell signal, continues retreat from recent highs
  • Index active buy signal, continues to pull back from April highs
  • Momentum active buy signal, consolidates decline form April highs
  • Order Flow Trader bullish


USDCAD Outlook – Bullish

A barnstorming week last week for the Canadian currency with a less dovish than expected BoC adding fuel to the fire which was lit on weak US data. BOC did however revise down their growth forecasts but cited the US recovery and a weaker currency as reasons to believe they would pull through.

  • Strength active buy signal, consolidating just below 2015 highs.
  • Index active buy signal, ticks up from last week’s lows.
  • Momentum sell signal, sell at Fridays close or better
  • Order Flow Trader bearish


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