Originally published by AxiTrader
Large speculators have been bearish on the US dollar for the past half year or so, but we might have reached the point where sentiment could turn.
After a series of rather disappointing economic data from the Euro Zone, the ECB showed itself from the dovish side. Meanwhile, rate expectations in the UK have declined, which sent the British pound back below 1.40.
If we compare that to the US - where the economy is still running strong and inflation expectations are rising, it is clear why the Greenback has been in demand recently.
Euro net positioning has declined from 151k to 131k long. A decline below 1.20 is likely to put more pressure on the currency and force euro bulls to retreat.
Pound net positioning stood at 37k last week - down from 48k previously.
The demand for the Japanese yen has dropped too. Net positioning fell from 3k to 1k long. Tensions between North Korea and the USA have decreased, and the yen is likely to suffer in the near-term amid the improvement in risk appetite.
Finally, large speculators have covered some of their Australian dollar short positions, bringing net positioning from 10k to 3k short.
