FX.co ★ EUR/USD

EURUSD. Greetings. The latest COT report on euro futures for September 29 has come out, and it shows continued bearish pressure, but with some important nuances. Open interest increased by 32,270 contracts to 853,959. This is a notable rise after a sharp drop the previous week. The number of traders rose to 336. That is, the market has started to refill with money again, but this time the increase is coming not from small speculators but from large players. Now by category. Large speculators (Non-Commercial) sharply increased short positions. Longs grew by 17,475 contracts to 238,183, but shorts grew significantly more — by 28,397 contracts to 301,439. Their net short position increased from 52,334 to 63,256 contracts. Speculators continue to build shorts, and the pace is not slowing. Commercial participants (Commercial) increased both long and short positions, but longs grew more — by 14,268 contracts versus 2,658 shorts. Their net long position rose from 28,967 to 40,577 contracts. Commercials continue to buy the dip, which is a bullish signal. In the expanded report the picture is as follows. Dealers and intermediaries slightly cut short positions by 9,948 contracts to 259,712 and marginally reduced longs. Asset managers increased both longs and shorts, but longs grew more — by 18,124 contracts versus 14,004 shorts. Leveraged funds sharply increased short positions by 23,277 contracts to 164,122 and increased longs by 10,706 to 124,857. Their net short position rose from 25,969 to 39,265 contracts. Now let’s compare this with levels. The options balance is at 1.15193. The balance of the current futures contract is in the zone 1.14900-1.14763. The long-term trend COT balance is at 1.15020. The lower boundary of the option range is 1.11771. It’s worth noting how close the key levels have converged. The options balance 1.15193, the long-term trend COT balance 1.15020 and the current futures contract balance 1.14900-1.14763 form a tight zone around 1.148-1.152. In other words, a dense zone of support has turned into significant resistance. What this means for the outlook. The COT data for September 29 show that speculators and leveraged funds continue to add to short positions. These are bearish signals. Commercials and asset managers are adding long positions. These are bullish signals. The market remains divided, but the edge is currently with the bears, since the speculative short is growing faster. Open interest rose, indicating an inflow of new money. Unlike the previous week, when small traders were leaving the market, large players are now entering. This creates the conditions for a stronger move. The key resistance zone is now located around 1.148-1.152. As long as price remains below this zone, the bearish scenario retains strength. If price attempts to return above the 1.148-1.152 zone, these levels will constrain the rise. For confirmation of a bullish scenario, price needs to settle above the options balance and the balance of the current futures contract. So far this has not happened. Thus, the picture favors the bears. Speculators are building shorts, leveraged funds are increasing short positions, and open interest is rising. Commercials continue to buy the dip, but their support is not yet sufficient for a reversal. The next COT report will show whether the short build continues or commercials can turn the situation around. For now we remain in observation mode and wait for price to approach the key targets. Good luck.