Positioning is neutral for most currenies, suggesting that the US dollar may continue strengthening.
US Dollar Index: The composite COT has dropped from high levels, which warns of a top. However, with speculative longs gradually decreasing and now back to more levels, confidence in a top is low.
Implications: neutral
EUR: Composite COT remains near historically low levels, which is suggestive of a bottom. However, speculative shorts have gradually declined and positioning is not considered extreme anymore. The euro could continue falling.
GBP: The interpretation of the British Pound COT numbers are the exact same as the interpretation of the COT numbers for the Euro.
CHF: Although the 52 week index turned from 0 at the end of October (which warns of a bottom (USDCHF top), positioning is no longer considered extreme and confidence in a low (USDCHF top) is low.
JPY: Bottoms in the USDJPY occur when speculators are extremely long the JPY (short USDJPY), which is not yet the case. Continue to favor Yen strength.
Implications: bullish
CAD: CAD positoning is neutral. The Composite COT is near 0. There is nothing worth noting.
AUD: Composite COT is at a level that previously indicated an important low (March 2006). This combined with the turn up from 0 in the 52 week index favors strength.
NZD: The NZD index has turned from 0. Speculators were recently net short the largest amount of NZD on record (the record only goes back a few years though). These are bullish signals.
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.
Contact at jsaettele@dailyfx.com