USD Bulls, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched – COT Report

US Dollar, EUR/USD, GBP/USD, COT Report –Analysis

  • USD Net Shorts at a 1 Year Low
  • Euro Sentiment Soft, GBP Vulnerable to Pullbacks
  • AUD Longs Looking Stretched

USD Shorts at 1 Year Lows, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched – COT Report

In the latest CFTC data to March 30th, investors have continued to pile into the US Dollar as net shorts were cut by an additional $2.6bln, taking overall short USD positions to its lowest level in a year. The changes in positioning were predominantly against the Euro, which saw outflows of $2.87bln. As I have mentioned previously, the theme of US exceptionalism is picking up and is among the focal points for my top Q2 FX trade idea. That said, with strong US data ahead, this is likely to keep the greenback underpinned, particularly against the Euro, which has continued to struggle from its slow vaccine rollout.

Another currency that has garnered attention is the Japanese Yen, which saw a more modest increase in net shorts, up $670mln with real money accounts the main reasoning behind the rise. Subsequently, investors now hold the largest net short in JPY since May 2019. Aside from looking technically stretched on the topside, there is very little going for the Japanese Yen on the fundamental side with indices pushing to record highs in the US and Europe (JPY negative) and US economic data also surpassing expectations. In turn, while rising US yields may have calmed down slightly as of late, a robust economic rebound continues to point to higher yields, which has been the main driving force behind the move in USDJPY.

The Pound saw a pick-up in net longs once more after a $270mln increase, while adjusted for open interest, the currency remains the largest long at 17.9% and as I have said previously, this makes GBP vulnerable to oversized pullbacks. That being said, outsized moves on the upside in EUR/GBP is likely to be the preferred avenue to fade GBP weakness.

Across the commodity currencies, the AUD sentiment improved as net longs grew by $480mln, while NZD and CAD were relatively unchanged. Going back to the Aussie, positioning is beginning to look slightly stretched with a z-score of 1.91, potentially paving the way for relative NZD outperformance in the short term.

AUD/USD Mixed

Data provided by

of clients are net long. of clients are net short.

Change in Longs Shorts OI
Daily 2% -3% 0%
Weekly -8% 2% -4%

Weekly FX Positioning

USD Bulls, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched - COT Report

Source: CFTC, DailyFX (Covers up to March 30th, released April 2nd)

The Analytical Abilities of the COT Report

How to Read the CFTC Report

US Dollar Positioning

USD Bulls, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched - COT Report

Source: Refinitiv, DailyFX

USD/JPY Positioning

USD Bulls, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched - COT Report

Source: Refinitiv, DailyFX

GBP/USD Positioning

USD Bulls, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched - COT Report

Source: Refinitiv, DailyFX

AUD/USD Positioning

USD Bulls, Euro Sentiment Soft, GBP Vulnerable, AUD Longs Stretched - COT Report

Source: Refinitiv, DailyFX

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