US dollar: traders are preparing for a decline in the American currency?

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 decreased their net position to purchase contracts on the dollar index by 0.3 thousand contracts, bringing it down to 19.2 thousand. This decrease follows a 6-week period of growth, and marks the first time the net position has declined since December 13 of last year, when it reached its highest level.

Hedgers (COMMERCIAL) have been increasing their net position to sell contracts on the dollar index for the past seven weeks, bringing it up to 20.8 thousand contracts - the highest it has been since December 13 of last year. This week alone, the net position increased by 0.1 thousand contracts.

The open interest rose by 1.8 thousand contracts, bringing the total to 43.1 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators decreased by 0.36 over the week, bringing it to 3.05.

Data from the COT report on the dollar index (USDX) shows that large speculators have become more bearish on the US currency. Large funds have been actively selling and buying, resulting in a decrease in their net position on the dollar for the first time in seven weeks. This net position has also started to decrease from its highest levels in the past 10 months. If this trend continues, it could lead to a decrease in the value of the US dollar.

If hedgers and large speculators join forces next week, the USD could experience downward momentum due to the slight increase in net position on dollar growth that hedgers have caused.

COT reporting data is essential for medium to long term trading. Large speculators, NON-COMMERCIAL (banks, investment funds) usually trade in line with the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, generally 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.