Summary of COT Report Analysis
On March 4, 2025, the Commitment of Traders (COT) report revealed significant shifts in market positioning among large speculators, particularly regarding the Japanese yen and euro futures.
Japanese Yen Futures (JPY/USD)
Large speculators have increased their net-long exposure to Japanese yen futures to a record high for the second consecutive week, adding 37.6k contracts. This marks the fastest weekly increase in over six months, with a total of 92.5k new longs added over the past seven weeks. Additionally, there was a notable reduction in short positions, with 25.4k contracts covered, indicating a strong bullish sentiment. Open interest also rose by 25k contracts, nearing the record high set in September 2024.
Euro Futures (EUR/USD)
In contrast, large speculators are nearing a shift to net-long exposure in euro futures, having reduced their net-short positions to a 16-week low of -10k contracts. This change is accompanied by an increase in long positions, suggesting a potential bullish outlook for the euro. As prices continue to rise, it is anticipated that bullish sentiment will strengthen in the upcoming week.
US Dollar Positioning
The US dollar index experienced its worst performance since November 2022, declining approximately 6% from its January high. Despite finding support at the 61.8% Fibonacci retracement level, the momentum suggests that the cycle low may not yet be reached. Net-long exposure to the US dollar fell by $6.4 billion, marking the least bullish level since October 2024.
Nasdaq 100 Futures
Asset managers have shown a reluctance to engage with the tech sector, reducing gross longs for the second consecutive week while simultaneously increasing their short positions to a two-year high. This has resulted in net-long exposure dropping to its lowest level since November 2023.
Gold Futures
In the gold market, both large speculators and asset managers are reducing their long positions while increasing shorts. Despite this, gold prices remain elevated, indicating that traders may be waiting for a pullback before re-entering the market on the long side.
Conclusion
The COT report highlights a significant bullish sentiment towards the Japanese yen and a potential shift in euro futures, while the US dollar shows signs of weakness. The tech sector remains under pressure, and gold traders are cautious, awaiting better entry points. These trends suggest a dynamic market environment that traders should monitor closely.