US dollar: traders have not decided on the direction

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

After a weekly increase, large speculators (NON-COMMERCIAL) slightly decreased their net buying position on the dollar index by 4.4 thousand contracts to 4.6 thousand. This brings the net position back to levels not seen since the beginning of July 2021.

Hedger operators decreased their net sell position on dollar index contracts by 0.4k contracts, bringing it down to 5.6k. This follows a weekly increase in their net sell position.

The open interest rose by 7,000 contracts, bringing the total to 33,900.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased by 0.10 over the week, bringing it to 1.24.

The COT report data on the dollar index (USDX) has revealed a rise in bearish sentiment towards the US currency. Traders have been actively buying and selling, resulting in a slight decrease in the net position for the dollar's growth. This has caused the net position to approach the lowest levels seen in the past two years. If this trend continues, it could lead to a decline in the value of the US dollar.

Traders not only bet on the dollar's decline, but also actively increased their positions in anticipation of its growth. Many of them expected the US currency to continue to rise.

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.