What the COT report is telling us about EURUSD

George Kessarios

George Kessarios
Chief Economist & Fund Manager

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Analyst Insights, Thursday, 27th of August, 2020

There are two categories of investors that I avoid going against. The first is strategic short sellers and the second the "non-commercial" speculative currency futures traders or the nice folks mentioned in the COT report.

The reason is, both categories of investors do their homework. Insofar as currency speculators, they have a very deep understanding of what drives currencies and are usually right.

As per the most recent COT report dated August 21, net long EURO positions are the highest they have been in over a decade.


Does this signal a crowded-trade, and should we take this data as a contrarian indicator? I doubt it. This category of investors do their homework and are usually right. And when I see a record number of contracts long EURO, the most likely outcome is that the EUR’s climb vs the dollar should continue.

Yes, they could be wrong and they might be forced to reverse course, however until they do, I for one do not dare go against this very sophisticated group of investors. The next COT report is on Friday, August 28 so we should get the additional color as to their sentiment on the EURO, which might provide insight for the direction of the Euro near term.

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