US dollar: speculators are preparing to decline?

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

Non-commercial large speculators have increased their net buying position on the dollar index for the third consecutive week, and for 5 out of the last 6 weeks. This week's net position of 15 thousand contracts is the highest since January 31st.

Hedgers (COMMERCIAL) have been steadily increasing their net sell position on dollar index contracts for the past 4 out of 6 weeks, bringing it up to 17.3k contracts - a 0.8k increase from the previous week. This is the highest net position since January 31st.

The open interest rose by 0.4 thousand contracts, bringing the total to 27.7 thousand.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased by 0.05 to 3.38 over the week, which was caused by an increase in sales.

Data from the latest COT report on the US Dollar Index (USDX) indicates a slight rise in bullish sentiment towards the US currency among large speculators. After the quarterly expiration of futures, large funds ceased to add to their net position on the dollar at its 5-month peak and started to increase sales.

Hedgers, who trade for the longer-term, are more optimistic about the dollar. They have recently increased their net position for USD growth, and this has been the highest it has been in the last 5 months. If large speculators join the hedgers in the coming week, the dollar could potentially continue to gain strength.

COT report data is essential for medium and long-term trading, and is mainly used by large speculators, NON-COMMERCIAL (banks, investment funds). These traders usually follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, have little impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually go against the trend (black line). The net position is the difference between the number of buy and sell contracts, while open interest is the total of all open positions in the market.