Originally published by AxiTrader
The latest data from the CFTC shows that large speculators have increased their euro long positions by 6k contracts, bringing the net positioning to 145k. The numbers were collected on Tuesday, two days prior to the ECB meeting. More momentum buying followed the central meeting, and next week´s report is likely to show a figure above 150k.
However, some euro bulls start to question if the current rally is sustainable. There are solid reasons for being bullish on the euro - the ECB has signalled a shift in monetary policy; the economy of the Euro Zone is performing well and there is broad Dollar weakness. Nevertheless, in the short-term, the euro rally does seem a bit stretched from a technical perspective. Record high long positioning is another warn signal. In the near-term, a correction towards 1.22 should be expected before the rally continues.
Speculators also added to pound longs, bringing the net positioning to 33k long. The amount of pound longs remains relatively low, especially given how far it has managed to rally in such a short time.
Meanwhile, even the yen bears started to give up. JPY short positioning decreased to 119k, and the recent break below 110 likely led to a further squeeze.
Large speculators have also turned more bullish on the commodity currencies again. Australian dollar long positioning jumped from 10k to 17k, while Canadian dollar long positioning increased by 5k to 23k. New Zealand dollar bears capitulated, taking net positioning from 8k to 1k short.
