Saturday July 1, 2017 - 11:16:27 GMT
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Amazing Trader Ideas And Commitment Of Trader Data For June 27, 2017 Register To Test Your Amazing Trader
Forex trading is all about stops. The Commitment of Traders Report (COT) is an imperfect, but useful, "sampling" of market positioning. I would prefer more frequent and precise readings, but we have to live with what we get. The data work for the purpose of getting an idea if traders are positioned long or short and if they in big or small.
EURUSD net long positions increased early in the past week, and undoubtedly increased more over the period. Upside EURUSD momentum suddenly gained momentum following early week comments by ECB Presodent Draghi. Psychological 1.1400 support is now key to maintaining this renewed upside momentum. As a reserve currency, keep in mind EUR positions are not just against the USD. EUR crosses vs. the JPY and GBP are critical. The European economy is improving and that should remain a EUR positive.
Net GBPUSD positions remained short and steady through the COT data period, but udoubtedly mant shorts were covered in the back half of the week as the GBPUSD folowed the EURUSD higher. Furthermore, BOE Governor Carney took a more hawkish mometary posture after the Draghi comments. The unit is highly sensitive to U.K. economic data, and that is helpful to those of us who rely on active markets. GBPUSD 1.3000 is the demarcation line between strength or weakness. Keep an eye on the EURGBP cross as a barometer of flows in and out of the EUR. These flows often directly impact both units against the USD.
The USDJPY pair continues to be heavily manipulated by the Bank of Japan, which tries to keep its currency depressed to stimulate exports. Whenever the USDJPY starts to slide, expect to to see BOJ support for the pair. Keep in mind, the USDJPY correlates positively with the yield on the U.S. 10-yr note. With U.S. rates moving higher, USDJPY longs have INCREASED (=Short JPY futures). Baak of Japan policy is nowhere near tightening!
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