The speculative market remains far too long euros but pared back the position in the latest week of CFTC data, in what might be a sign of what's to come.
the EUR's net speculative long positioning witnessed a significant decrease, dropping to 173,736 contracts compared to 187,089 in the previous week. As investors appeared to cut their bullish bets, the shift suggests some caution may be seeping into the market sentiment regarding the euro's performance.
The Japanese yen experienced a considerable surge in short positions, hitting 80,660, marking a notable increase from the previous 64,791. This indicates a growing bearish outlook among traders on the yen. Similarly, AUD saw a decrease in its short positioning to 49,081, a slight relief from the preceding week's 54,594.
In contrast, the British pound's long position fell marginally from 12,593 to 11,589.
The Swiss Franc saw its small short position cut in half to 903 from the previous week's 1,859, signalling a potential shift in traders' sentiment towards a less bearish outlook.
In net week's data, I would expect to see more signs of US dollar buying as the dollar surged, inflation rose and the debt ceiling fiasco neared a conclusion. Given the size of the euro net position, it's particularly vulnerable.