US dollar: are the bulls losing their grip?

The Commodity Futures Trading Commission (CFTC) reported, for the week ending last Tuesday, that the Commitments of Traders (COT) reports showed.

Non-commercial large speculators increased their net position to purchase contracts on the dollar index by 0.5 thousand contracts, bringing the total to 19.7 thousand. This increase follows a small weekly decrease, and marks the seventh time in the last eight weeks that the net position has grown. The current net position is the highest it has been since December 13 of last year.

Operator hedgers decreased their net position to sell contracts on the dollar index by 0.2 thousand, bringing it down to 20.5 thousand. This marks the first decrease in the net position in seven weeks, after it had been steadily increasing since December 13 of last year and reaching its highest levels.

The number of open contracts decreased by 0.4 thousand, bringing the total to 42.7 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators rose by 0.27 over the course of the week, reaching a total of 3.32.

The Commitment of Traders (COT) report on the dollar index (USDX) has revealed a resurgence of bullish sentiment for the US currency among large speculators. After a week-long hiatus, large funds have resumed increasing their net position on the dollar, pushing it to its highest levels in the past 10 months. If this trend continues, it could lead to further appreciation of the American currency.

Hedgers who are trading for the long-term have become less optimistic about the dollar. They have started to reduce their large net position on the USD, which had been at 10-month highs. If large speculators follow suit in the coming week, the dollar could experience a decline in value.

The net position has remained relatively unchanged over the past two weeks, suggesting a degree of market uncertainty.

COT reporting data is essential for medium to long term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) tend to follow the trend (blue line). On the other hand, small speculators, NONREPORTABLE POSITIONS, usually do not have much impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually trade against the trend (black line). The net position is the difference between the number of buy and sell contracts. Open interest is the total of all open positions in the market.