Market Positioning Highlights – March 13, 2025

The latest Commitment of Traders (COT) report reveals a significant shift in EUR/USD futures, with large speculators flipping to a net-long position for the first time in 21 weeks. Meanwhile, bullish sentiment on Japanese yen futures has surged to record levels, hinting at a potential sentiment extreme that could slow further gains.

Other key takeaways from the report include:

• Net-long exposure to the U.S. dollar declined for a sixth straight week, dropping by $4.8 billion.
• GBP/USD net-long positioning rose to a 16-week high.
• AUD/USD futures open interest hit a record high, though lower speculative volume suggests increased hedging.
• Silver futures net-long positions reached their highest levels this year, while gold futures net-long exposure dropped to a year-to-date low.

U.S. Dollar Positioning: Weakening Momentum

The net-long positioning on the U.S. dollar continues to shrink, now at a 21-week low, according to International Money Market (IMM) data. Asset managers have been reducing their USD Index (DXY) futures holdings, marking the sharpest decline in long positions since July.

Technically, the USD Index is hovering above the 61.8% Fibonacci retracement level and remains near its November low. However, with the dollar just coming off its worst week since November 2022, a short-term bounce could be on the horizon—especially if the Federal Reserve maintains a less dovish stance than expected.

EUR/USD: Flipping to Net-Long

After 21 consecutive weeks in net-short territory, large speculators have switched to a net-long position on EUR/USD. The shift is largely driven by short-covering, with gross-short positions reduced for the fifth straight week. The latest cut of -19.7k contracts (-10.1%) marked the fastest pace of short liquidation since November.

Asset managers also boosted their net-long EUR/USD exposure to a 22-week high, signaling growing bullish sentiment. With speculative interest rising alongside price action, this positioning shift could further support euro strength in the short term.

JPY/USD: Reaching Sentiment Extremes

Bullish bets on the Japanese yen (JPY/USD) continue to climb, with large speculators hitting a record net-long position last week. However, the increase of just 251 contracts suggests momentum is fading, especially compared to previous weekly increases exceeding 30,000 contracts.

Both gross-long and gross-short positions were trimmed by speculators and asset managers, leading to a second consecutive week of declining trading volume. This suggests JPY/USD positioning may be near an extreme, raising the possibility of a counter-trend move favoring a dollar recovery against the yen.

S&P 500 Futures: Entering a Technical Correction

Wall Street’s indices have now declined for five straight weeks, pushing the S&P 500 into a technical correction—down 10% from its cycle high.

• Asset managers’ net-long exposure to S&P 500 futures is at a 10-week low.
• Nasdaq bullish positioning is at its lowest since April 2023.
• Dow Jones net-short positions have risen to their highest level since November 2023.

With stocks under pressure, traders are debating whether this is simply a pullback or the start of a bear market. However, history suggests bear markets often include sharp counter-trend rallies before resuming their downward trajectory.

Gold and Silver Futures: Diverging Trends

• Gold futures traders have been scaling back positions, even as prices approached $3,000. This hesitation suggests some expect a pullback, though positioning is not yet at a sentiment extreme.
• Silver futures net-long exposure is increasing, indicating growing bullish sentiment. However, silver’s next move may depend on whether gold successfully breaks above $3,000.

WTI Crude Oil: Lack of Conviction from Both Bulls and Bears

Large speculators and asset managers increased net-long positions on WTI crude oil last week for the first time since mid-January. However, with both long and short positions being reduced, overall speculative volume remains subdued.

Despite recent weakness, long-term support levels remain intact, and with crude experiencing a multi-week selloff, near-term upside potential remains—though traders are exercising caution.