Technical Analysis Summary of EUR/USD and Other Currency Futures
This summary provides an overview of the recent technical analysis based on the Commitments of Traders (COT) report dated March 18, 2025, focusing on the positioning of various currency futures, particularly EUR/USD, GBP/USD, NZD/USD, and the US dollar index.
EUR/USD Positioning
Recent data indicates a significant shift in the positioning of traders in the EUR/USD futures market. Large speculators have increased their net-long exposure to EUR/USD futures to a 25-week high, marking a notable spike in short-covering. The reduction of short contracts by 46,000 represents the fastest pace of short-covering since March 2020. This trend suggests a bullish sentiment towards the euro, as traders are closing out their short positions in anticipation of further gains.
GBP/USD Positioning
In the GBP/USD futures market, asset managers have reduced their net-short exposure ahead of the Bank of England's recent meeting. The current net-short position stands at -13.1k contracts. Despite a cautious tone from the BOE regarding future rate cuts, large speculators remain net-long, albeit flat on the week. The technical indicators, including a doji and shooting star pattern on the GBP/USD chart, suggest potential volatility ahead, with the possibility of a USD bounce impacting GBP positioning.
NZD/USD Positioning
The NZD/USD futures market has seen a significant reduction in net-short positions, with large speculators closing shorts at the fastest pace since December 2022. This shift comes after New Zealand's economy showed stronger-than-expected growth, pulling it out of a technical recession. The sentiment appears to be shifting positively, as indicated by the Citi Economic Sentiment Index moving back into positive territory.
US Dollar Index Positioning
Traders have flipped to a net-short position on the US dollar for the first time since October, with a reduction in net-long exposure by $1.7 billion. Despite this, asset managers maintain a slight net-long position in the USD index. The technical analysis shows a small bullish hammer and a doji pattern around the 61.8% Fibonacci retracement level, suggesting that the US dollar may be poised for a bounce before any further declines.
Metals Futures Positioning
In the metals market, particularly gold, large speculators have increased their net-long exposure for the first time in six weeks, indicating a bullish sentiment. The increase of 25.4k gross longs is the strongest initiation since September, suggesting that traders are beginning to chase higher gold prices. Silver has also seen an increase in net-long positions, although it has yet to break above its October highs.
Conclusion
The recent COT report highlights significant shifts in trader positioning across various currency futures, with notable bullish sentiment towards the euro and a cautious outlook for the US dollar. The technical indicators suggest potential volatility and opportunities for traders to capitalize on these market movements.