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Sunday, August 10, 2025

Japanese Yen Index Futures COT Report Analysis (5 Aug 2025)

 

Key Observations:

  1. Market Sentiment & Positioning:

    • Dealers (Banks/Market Makers) are heavily short (199,843 contracts, 56.6% of Open Interest), suggesting institutional bearishness.

    • Asset Managers/Institutional Investors are strongly long (99,799 contracts, 29.6%), indicating bullish expectations.

    • Leveraged Funds (Hedge Funds) are net short (60,091 vs. 38,441 long), reinforcing bearish speculative bets.

    • Other Reportables (likely large speculators) hold a massive long position (95,451 vs. only 1,651 short), showing extreme bullish conviction.

  2. Changes in Positions (Week-over-Week):

    • Asset Managers reduced longs (-3,683 contracts) while increasing shorts (+19,738), signaling weakening confidence.

    • Leveraged Funds slightly increased longs (+1,441) but added more shorts (+12,213), reinforcing bearish momentum.

    • Other Reportables increased longs (+3,277), maintaining their bullish stance.

  3. Open Interest & Market Activity:

    • Total Open Interest: 337,378 contracts (↑13,263 from prior week).

    • Nonreportable Positions (small traders) are nearly balanced (37,362 long vs. 32,027 short), showing no strong retail bias.

Interpretation & Implications:

  • Bearish Pressure: Dealers and leveraged funds dominate the short side, suggesting downward pressure on the Yen.

  • Bullish Divergence: Asset managers and "Other Reportables" hold strong long positions, indicating potential for a reversal if fundamentals shift.

  • Market Conflict: Institutional players (Asset Managers) are reducing longs, while speculative traders (Other Reportables) are adding, creating uncertainty.

Trading Outlook:

  • Short-term: Yen may remain weak due to strong dealer and hedge fund shorts.

  • Medium-term: If Asset Managers and Other Reportables continue accumulating longs, a bullish reversal could emerge.

  • Key Levels to Watch:

    • Resistance: If "Other Reportables" keep adding longs, watch for a squeeze.

    • Support: If leveraged funds increase shorts further, Yen could decline further.

Conclusion:

The COT report shows a divided market, with strong institutional shorts but significant speculative longs. Traders should monitor shifts in dealer positioning and macroeconomic catalysts (BoJ policy, USD trends) for directional bias.


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