Saturday December 23, 2017 - 12:37:47 GMT
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Chart Points: Free Forex Database For 19 December 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 have been fluctuating for months around a 80K contracts level. In the latest week, net EUR longs eased back near 80K. The heavy blue line (once a week spots) provides a useful perspective on the price action. In the latest week the market has returned to a rough 1.1850 EURUSD level.
As the alternative reserve currency to the USD, keep in mind EUR positions are not just against the USD. EUR crosses vs. the JPY and GBP are critical. The European economy continues to improve and that should remain a EUR positive.
The market remains long USDJPY (short JPY). JPY open interest tends to track the USDJPY exchange rate closely.
The USDJPY has always been heavily manipulated by the Bank of Japan. It typically tries to keep the currency depressed to promote exports. Whenever the USDJPY starts to slide, expect to encounter covert BOJ USDJPY support. The USDJPY often correlates positively with the yield on the U.S. 10-yr note which is targeting a yield of 2.50%.
Net GBPUSD positions flipped long ten weeks ago, then turned square and now are modestly net long. The GBPUSD spot line (heavy blue) has stabilized, supporting the GBPUSD longs.
This GBPUSD pair is more sensitive than most to its economic data. This characteristic makes it more attractive to those of us who rely on active markets. 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 so should be watched by active traders.
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