Currency strength after U.S CPI event 15 July 2025
Tuesday, July 15, 2025
Sunday, July 13, 2025
GBPUSD under pressure for bearish sentiment
Near term support 1.3860. Break below this level and the uptrend line may see further weaken of the British pound.
EURGBP Seen Strong Bullish
Gold Analysis H4 chart
Gold near term resistance 3368.00. If price break above this level we may see another uncertainty as happened in 16 June.
Analysis of the Japanese Yen COT Report (as of 8 July 2025)
Key Observations:
Open Interest & Market Activity
Total Open Interest: 308,621 contracts (↑3,680 from prior week).
Number of Traders: 133 (indicating concentrated participation).
Positioning by Trader Category
Dealer Intermediaries (Banks/Market Makers):
Net Short Dominance: 65.9% of Open Interest (203,380 contracts short vs. 9,523 long).
Significance: Dealers are heavily hedging or betting against the JPY, suggesting expectations of further JPY weakness.
Asset Managers/Institutional Investors:
Net Long Bias: 36.6% of Open Interest (112,913 long vs. 25,159 short).
Spread Positions: 1.6% (4,968 contracts), indicating some hedging.
Implication: Institutions are bullish on JPY, possibly anticipating a reversal or safe-haven demand.
Leveraged Funds (Hedge Funds/CTAs):
Moderate Net Long: 13.8% long (42,605) vs. 10.4% short (32,223).
Spread Activity: 1.6% (4,874 contracts), showing mixed directional bets.
Context: Funds are slightly bullish but less committed than asset managers.
Other Reportables & Nonreportable Positions:
Other Reportables: Strong net long (30.0% long vs. 3.1% short).
Nonreportable (Small Traders): Net long (13.3% long vs. 9.2% short).
Long vs. Short Breakdown
Net Short Pressure: Dealers dominate shorts, while Asset Managers and Others drive longs.
Market Sentiment: Divergence between dealers (bearish) and asset managers (bullish) signals potential volatility.
Interpretation & Implications for JPY:
Bearish Pressure (Short-Term): Dealers’ extreme short positions may keep JPY weak, especially if driven by carry trades or BoJ policy expectations.
Bullish Potential (Medium-Term): Asset managers’ large longs could indicate expectations of a JPY rebound, possibly due to risk-off events or USD weakness.
Watch for Reversals: If leveraged funds shift to align with asset managers, JPY may rally.
Trading Considerations:
Short-Term: JPY may remain under pressure (align with dealer positioning).
Long-Term: Monitor for shifts in institutional flows or macroeconomic catalysts (e.g., BoJ policy changes, global risk sentiment).
British Pound COT Report Analysis (as of 8 July 2025)
Key Observations:
Open Interest (OI):
Total OI: 191,557 contracts (↑12,868 from prior week).
Leveraged Funds dominate long positions (36.2%), while Asset Managers lead short exposure (41.6%).
Positioning by Trader Category:
Asset Managers/Institutional:
Long: 66,611 (34.8% of OI) | Short: 79,765 (41.6% of OI).
Net Short: -13,154 contracts (bearish bias).
Leveraged Funds (e.g., hedge funds):
Long: 69,294 (36.2% of OI) | Short: 32,645 (17.0% of OI).
Net Long: +36,649 contracts (strong bullish stance).
Dealers (Banks/Brokers):
Long: 8,829 | Short: 39,841 → Net Short: -31,012 (typical for dealers to hedge).
Changes vs. Prior Week (Implied Shifts):
Leveraged Funds increased longs by 14,502 contracts and shorts by 14,061, reinforcing bullish momentum.
Asset Managers reduced longs slightly (+5,020) but added 11,248 shorts, deepening net shorts.
Dealers trimmed shorts (-14,107), possibly unwinding hedges.
Non-Reportable Positions (Small Traders):
Net Long: +10,348 (36,635 long vs. 26,287 short) → Retail/small speculators are bullish.
Interpretation & Market Implications:
Bullish Pressure: Leveraged funds and small traders are heavily net long, suggesting speculative demand for GBP.
Bearish Counterbalance: Asset managers remain net short, possibly hedging or expressing macroeconomic caution.
Price Outlook: Conflicting signals, but short-term bullish bias likely dominates due to leveraged funds’ aggressive positioning.
Tactical Notes:
Watch for profit-taking by leveraged funds if GBP rallies further.
Dealer net shorts (-31K contracts) may act as a contrarian indicator (dealers often fade retail trends).
Analysis of the Euro FX COT Report (as of 8 July 2025)
Key Observations:
Open Interest (OI): 885,847 contracts (↑126,816 from prior week) – strong increase, indicating heightened market activity.
Total Traders: 383 (↓ likely from prior week) – suggests consolidation among larger players.
Positioning Breakdown:
1. Dealers (Banks/Market Makers)
Net Short Dominance: Dealers hold 61.6% short vs. 5.1% long (496,248 vs. 41,200 contracts).
Implication: Major banks are heavily betting against the Euro, likely hedging or anticipating downside.
2. Asset Managers/Institutional Investors
Net Long Bias: 57.6% long (464,484 contracts) vs. 14.3% short.
Implication: Big money (pension funds, insurers) is bullish on the Euro, possibly expecting ECB policy shifts or USD weakness.
3. Leveraged Funds (Hedge Funds/CTAs)
Moderate Net Long: 13.1% long (105,233) vs. 9.4% short (76,110).
Implication: Hedge funds are cautiously long, but not aggressively so.
4. Other Reportables & Nonreportable Positions
Small Traders (Nonreportable): 12.3% long – retail/small speculators are net long but less influential.
Key Takeaways:
Divergence Between Groups:
Dealers (short) vs. Asset Managers (long) – Classic "smart money vs. dumb money" conflict. Dealers often hedge, while asset managers take directional bets.
Euro Sentiment: Mixed. Large specs are bullish, but dealers’ heavy shorts suggest institutional caution.
Price Action Context:
If Euro is rising, asset managers may drive further gains until dealers cover shorts.
If Euro falls, dealer shorts could accelerate the drop.
Tactical Outlook:
Bullish Scenario: A break higher could force dealer short-covering, amplifying gains.
Bearish Scenario: Dealers’ dominance may keep a lid on rallies, especially if macro risks (e.g., ECB dovishness) emerge.
Watch For: Changes in dealer positioning (short covering) or asset manager profit-taking.
Subscribe to:
Posts (Atom)