FX.co ★ EUR/USD

EURUSD. Hello everyone. The latest COT report on euro futures for September 8 has been released, and it requires very careful analysis because it mixes two powerful factors: the rollover of the futures contract and real changes in large players' positioning. Let's start with open interest. It surged by 77 052 contracts and reached 942 464. This is a colossal increase, but immediately it must be noted: most of this growth is technical, related to the rollover from the September contract to the December contract. The number of traders decreased to 314, which confirms the technical nature of the move. Some of the data by participant groups is clearly incomplete, and that is also a sign of a transition period. Now, regarding the structure. Commercial participants (Commercial) sharply increased both long and short positions. Longs rose by 59 242 contracts, shorts by 43 785. But since the shorts were larger in absolute terms, their net position became short again and amounted to minus 6 730 contracts. This is a bearish signal, but with the caveat of the rollover. Large speculators (Non-Commercial), on the contrary, reduced both long and short positions. Longs decreased by 4 968 contracts to 198 509, shorts were cut by 12 723 contracts to 241 125. Their net short position declined from 50 371 to 42 616 contracts. So speculators continue to close their shorts, but still remain net short. In the extended report the picture is even more interesting. Dealers and intermediaries practically did not change their long and short positions, but sharply increased spreads by 32 300 contracts. Asset managers increased long positions by 16 189 contracts and shorts by 28 764, while reducing spreads by 14 731. Leveraged funds reduced both long and short positions, but sharply increased spreads by 37 235 contracts. This is a classic picture of a rollover: large players roll over via spreads and arbitrage, not via pure directional bets. Now let's move on to the levels that currently define the whole picture. The option balance is at 1.15754. The upper boundary of the option range is 1.19329, the lower is 1.14476. The balance of the current futures contract is located in the zone 1.16172-1.16025. The long-term trend balance according to the COT data is in the range 1.15379-1.15257. What this means in practice. The price is currently trading around 1.16, that is inside the balance of the current futures contract 1.16172-1.16025. This is the key zone that determines the near-term direction. If the bulls can hold above 1.16172, the road to the upper boundary of the option range 1.19329 will open. If the price falls below 1.16025, the first target will be the option balance 1.15754, and then the long-term COT balance 1.15379-1.15257. The lower option boundary 1.14476 remains a distant reference in case of a strong bearish move. Comparing this with the COT data, we get the following picture. Speculators are reducing their short positions, which is a bullish signal. Commercials increased short positions, which is a bearish signal. Dealers and leveraged funds are actively working through spreads, which indicates high uncertainty and preparation for a strong move. Open interest increased, but a significant part of this growth is a technical rollover. Thus, the market is at a point of equilibrium where none of the groups has a clear advantage. The key battle is going on around the 1.16172-1.16025 zone. As long as the price remains above the option balance 1.15754, the bullish scenario remains viable. If the price settles below this level, pressure on the euro will increase, and the next target will be the levels 1.15379-1.15257. The next COT report, once the data stabilizes after the rollover, will show who is actually controlling the market. For now we remain in observation mode and closely watch the price reaction at the key levels. Good luck everyone.