The most recent CFTC Commitment of Traders report (COT) shows speculators are indecisive on the direction of the most heavily traded currency pair the EUR/USD. The lack of direction in the futures market could be significant in identifying the next move in the pair.
The most recent data from the International Monetary Market indicates speculators have maintained a small net long position in the EUR/USD as has been the case over the last 4-weeks. Speculators are net long by only 3,341 contracts while the average net position since the beginning of the year is 11,725 in favor of the EUR. At the same time open interest has fallen to 176K from a peak of 296K in June. The CFTC data highlights the reduced speculative flows in the EUR, hinting at a weakening trend.
And the price action is confirming what the COT data is showing. The EUR/USD has been consolidating between 1.46 and 1.40 for the past month and is now pressing the long term trend line from the May 2010 and January lows. Combining the bearish price action with the flow analysis from the IMM data that shows a lack of conviction and we begin to paint a gloomy picture for the EUR/USD.
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