Latest data from the Commodity Futures Trading Commission’s Commitment of Traders (COT) report shows notable shifts across major currencies and commodities. Traders collectively held a net short position in U.S. dollar (USD) futures totaling -$14.8 billion, the most bearish stance since September 2024.
Large speculators turned net short on USD Index futures for the first time since December, while simultaneously boosting their net-long exposure to Japanese yen (JPY) futures to a record high. Positioning shifts were also observed elsewhere:
Net-short exposure to Canadian dollar (CAD) futures fell to a 51-week low.
Net-short positions on Swiss franc (CHF) futures declined to an 18-week low.
Asset managers increased their net-long holdings of euro (EUR) futures to a 30-week high.
Exposure to Australian dollar (AUD) futures edged closer to flipping net-long, with only a slight -5k net-short position remaining.
Meanwhile, gold (GC) futures saw net-long positions among speculators and managed funds fall to a 13-month low, while net-long positions in WTI crude oil futures surged by 76,400 contracts combined.
Japanese Yen Futures Positioning Signals Sentiment Risk
Positioning in Japanese yen futures reached an extreme for the third consecutive week. Both large speculators and asset managers aggressively added to their gross long positions while trimming shorts, pushing net-long exposure to a record 298,000 contracts combined.
Such stretched positioning increases the likelihood of a sentiment reversal. Technical signals reinforce this view: a two-week bearish reversal pattern, known as a “dark cloud cover,” has appeared on the JPY futures chart near the September 2024 high. The combination of record-long exposure and technical resistance suggests the yen may be vulnerable to a downturn, favoring a potential rebound in the USD/JPY pair.
USD/JPY Technical Analysis: Daily Chart Insights
Technical indicators on the daily USD/JPY chart point to a potential bullish setup. A bullish divergence has formed on the RSI (2) within oversold territory, coinciding with price support above the 200-day Exponential Moving Average (EMA). A two-bar bullish reversal pattern — specifically, a “bullish piercing line” — also developed, hinting at a possible double bottom around the 140.00 level.
Traders may look for buying opportunities on pullbacks within last week’s range, targeting a rally toward 148.00, near trendline resistance and the 20-day EMA.
U.S. Dollar Positioning Remains Bearish, But Signals Trend Exhaustion
Despite the bearish -$14.8 billion net-short exposure in USD futures, sentiment may be nearing exhaustion. The exposure sits close to the lower end of its 1-standard deviation confidence range, and a small bullish hammer candlestick formed last week, often a sign of potential trend reversal.
However, asset managers remain net short the dollar, though not by an extreme margin. Without a decisive shift back to net-long positioning, any bounce in the USD could prove temporary, with further downside pressure likely over the coming weeks.
