US dollar: traders forming a reversal?

Based on the CFTC's COT (Commitments of Traders) reports for the week ending on the previous Tuesday:

The number of large speculators (NON-COMMERCIAL) who bought contracts for the dollar index increased by 0.5 thousand, reaching a total of 2.9 thousand. This was a reversal from their trend of decreasing their net position for 5 out of the last 6 weeks. The net position had been at a low level since July 2021, but has now started to rise.

Commercial hedgers raised their net position to sell contracts for the dollar index by 0.6 thousand contracts, reaching a total of 2.2 thousand. Operator hedgers also increased their net position to sell, breaking a nearly 6-week streak of decreasing positions.

The open interest stayed the same at 23.9 thousand.

The optimistic measure of significant investors (the proportion of buy contracts to sell contracts) rose by 0.04 to reach 1.22 during the week.

According to recent data from the COT dollar index (USDX), there has been a rise in positive sentiment towards the US currency. After a period of decline, traders have increased their overall position on the dollar's growth. This has also coincided with a rise in the net position, which has reached its highest level in 2.5 years. Additionally, large speculators have decreased their selling by 3% and have also increased their buying. If this trend continues, it could potentially lead to further growth for the American currency.

Over the past three weeks, the net position has remained relatively stable, suggesting a level of uncertainty in the market. To confirm the reversal of this position, it would be advisable to wait for the upcoming weekly report.

COT reporting data is essential and primarily utilized for medium to long-term trading. Large speculators, such as banks and investment funds, typically follow the trend (represented by the blue line). Small speculators, known as nonreportable positions, have minimal impact on the market (represented by the red line). Hedgers, including operators and large companies, typically trade against the trend (represented by the black line). The net position is determined by the difference between the number of buy and sell contracts. Open interest is the total number of open positions in the market.