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Weekly Market Positioning Overview – COT Report Highlights (6 May 2025)

• US Dollar (USD): Net-short exposure remained below the lower -1 standard deviation band for a second consecutive week, suggesting an oversold condition.
• Japanese Yen (JPY): While net-long exposure edged lower by 2.4k contracts, large speculators’ positioning remains near a record high—indicating a potential sentiment extreme.
• European Dollar (EUR): Net-long exposure among large specs was effectively flat on the week, asset managers increased net-long exposure to EUR/USD futures by 5.3k contracts.
• Swiss Franc (CHF): Large speculators reduced net-short exposure to CHF futures to a 20-week high
• Australian Dolar (AUD): Large speculators reduced net-long exposure to an 8-week low
• Gold: Net-long exposure among large speculators and asset managers fell to a 14-month low.

US Dollar Positioning: Weekly COT Report and IMM Data Insights

I’ve been calling for a bullish reversal in the US dollar in recent weeks, so it’s encouraging to see the USD index rise for a third consecutive week—even if gains remain cautious. Still, with both the US and China independently stating that trade talks have so far progressed well, we could be getting closer to a deal. That, in turn, may help alleviate some of the selling pressure that has weighed on the US dollar in recent months.

Traders were effectively net-short USD futures by -$17.6 billion last week—a slight reduction of $0.6 billion from the week prior. Notably, net-short USD exposure remained below the lower 1-standard deviation band for a second straight week—an oversold level the dollar typically doesn’t remain in for long.

However, asset managers increased their net-short exposure to the US dollar index to its highest level since December 2020, which serves as a reminder to stay alert to the risk of further USD weakness beyond the anticipated retracement.

Of the FX majors, USD/CAD remains my preferred pair for bullish setups at this stage.

JPY/USD Positioning: Japanese Yen Futures – Weekly COT Report

The Japanese yen is another forex market I’ve been flagging as reaching a sentiment extreme, so it’s encouraging to see USD/JPY rise for a third consecutive week. Large speculators have recently pushed net-long exposure to record highs, although last week saw a slight reduction of 2.4k contracts.

It’s also worth noting that large speculators increased gross-short exposure to yen futures for the first time in five weeks, by 3.6k contracts. While this may not signal an outright shift in sentiment, it’s a start—and bears need to enter the market somewhere.

CAD/USD Positioning: Canadian Dollar Futures – Weekly COT Report

The Canadian dollar printed a bearish engulfing candle last week, which translates to a bullish engulfing week for USD/CAD. Traders have remained net-short CAD futures for 15 months, although in recent months they’ve reduced their net-short exposure while the Canadian dollar appreciated—aligning with my broader bias. I’ve been anticipating a reversal lower in the CAD, and that move now appears to be underway.

While I previously outlined a 1.40 target for USD/CAD, I now suspect prices will break above this key level and head towards at least 1.41.

Gold Futures Positioning (GC): Weekly COT Report Analysis

The divergence between net-long gold exposure and gold prices continues to widen, with large speculators and managed funds steadily reducing their long positions. With a combined net-long exposure of approximately 264,000 contracts, traders are now the least bullish on gold futures in over a year.

It’s worth noting that short positions remain low and are not showing signs of trending higher. I also doubt we’ll see traders actively bet against gold anytime soon. However, prices may need to come down further to entice some of the side-lined bulls back into the market.

Price action also suggests that a pullback could be due—perhaps a move towards the $3,000 level could be on the cards.