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Big Players Increasing Euro Short Positions

On Friday the euro/dollar rate closed at 1.0884 against 1.0874 at the Asian opening. There was a flat with an intraday fluctuation at 147 points. Over the daily period, Friday’s candlestick closed the doji, which indicates uncertainty.

Currently, the euro has fallen from 1.0947 to 1.0854. There was practically no reaction to J. Hellen’s, Chair of the US Fed, speech. Hellen repeated what she had already said on 18th March after the FOMC had convened. The only thing that she added was that the regulator could not afford to wait until inflation hit 2% to change interest rates. The tightening of monetary policy may well speed up, slow down, pause as it is or do a U-turn.

From data published in the US:

  • A definitive value for US GDP for Q4 has been put at 2.2% (forecasted: + 2.4%, confirmed: 2.2%).
  • A definitive value for the University of Michigan’s March US consumer confidence index has been put at 93.0 (forecasted: 92.0, provisional: 91.2).
At 12:00 EET March data on the Eurozone business climate will be released. At 14:00 EET Germany is publishing its provisional March data for the consumer price index. At 14:30 EET the dollar could be affected by data on American income levels and adjusted values for personal spending in February. At 16:00 EET there’ll be the uncompleted sales for the housing market.

The dollar/euro is trading at 1.0864. I expect that the euro/dollar will close down on Monday. Be it Monday today, the euro could fall to the D3 line. In the morning I’m even looking at a drop all the way to 1.0765 but limited by the trend.

As before, I reckon that the euro/ dollar pair will keep its bear trend and the euro’s fall will hasten in the coming days. I believe it important that on 18th March Hellen couldn’t change the mood of the bigger players. After the meeting when the euro/dollar jumped 4 figures, many experts indicated a reduction of euro short positions. I agree with them that the euro’s growth was caused by the activation of protective stops for short positions on the euro. However, the bigger players took advantage of the correction and, conversely, from 1.10 increased their short positions.

The new weekly report from the CFTC (Commodity Futures Trading Commission) from Friday 27/03/2015 confirms this. The COT (Commitments of Traders) report shows a reduction of trader’s open positions from 18/03/2015 to 24/03/2015.

The opening of positions increased by 12,982 contracts to 584,793. The bigger speculators increased their short positions by 17,851 to 268,653. Long positions lessened by 1,848 to 48,818. Visually we see a euro correction, but in reality the bear trend is gaining momentum. The bigger players are continuing to sell the euro. Hedgers are increasing longs. As part of this correction a new downward trend will be borne.

The smaller speculators were intimidated by Hellen’s speech. They lessened their short positions by 597 contracts and increased long positions by 1,088. They currently stand at 45,535 short and 100,443 long.

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