FX COT Update: EUR Longs Move To Fresh Record Highs As Investors Await The ECB

EUR/USD

 

Non-Commercials increased their net long positions in the Euro last week buying a further 4k contracts to take the total position to 152k contracts. This latest growth in upside exposure brings EUR long positioning to fresh record highs as traders position themselves in anticipation of the ECB normalizing monetary policy. Accordingly, main focus this week will be on the ECB’s April rate decision and monetary policy meeting.

While the bank is not expected to adjust policy any further at this stage, the market will be keen to hear the bank’s latest economic assessment and outlook and while many are expecting the bank to strike a hawkish tone, endorsing the continued EUR buying spree, there are downside risks.

Recent eurozone data has shown signs of moderating alongside growing fears regarding a trade war, could fuel the ECB to strike a more cautious tone compared with the last meeting where the bank cited upside risks. If the bank does strike a more cautious tone we can expect some retracement in ECB, though ultimately the market is geared for a topside break and any dips are likely to be bought into.

GBP/USD

 

Non-Commercials increased their net long positions in Sterling last week buying a further 5k contracts to take the total position to 48k contracts. While GBP upside continues to grow some of these later established positions will likely have been taken out in the GBP retracement. Investor sentiment has been growing favourably for GBP over the last 6 weeks, though events last week fuelled a sell-off as Retail Sales and CPI came in lower than expected, following by a dovish speech by BOE’s Carney who cast doubt on the likelihood of a May rate rise as he highlighted recent data weakness and said that policymakers are conscious that there will be other chances to raise rates this year.

USD/JPY

 

Non-Commercials reduced their net short positions in the Japanese Yen last week selling 0.2k contracts to take the total position to 3k contracts. After flipping net long earlier this month for the first time since 2016, JPY positioning has lost some steam over recent weeks as the market recalibrates following the shift in sentiment.