Positions of large speculators according to the COT report as at 5/7/2022

The Euro

Figure 1: The euro and COT positions of large speculators on a weekly chart and the EUR/USD on D1

The total net positions of speculators last week amounted to -16,852 contracts, down by 6,256 contracts compared to the previous week. This change is due to the growth of long positions by 7,724 contracts and the growth of short positions by 13,980 contracts. This data suggests bearish sentiment as the total net positions are negative while there has been a decline.
Open interest is up by 2,300 contracts in the last week. This shows that the downward movement that occurred in the euro last week was supported by the volume and is therefore a strong price action.
The price continued its strong decline last week and it seems that reaching parity on the EUR/USD pair is only a matter of time. The fundamental reasons for the downtrend are still in place - aggressive Fed policy, a more moderate ECB policy and the ongoing war in Ukraine.
Long-term resistance: 1.0350 – 1.0380
Support: 1.00
 

The British pound

Figure 2: The GBP and COT positions of large speculators on a weekly chart and the GBP/USD on D1

The total net positions of speculators last week reached 56,208 contracts, down by 3,090 contracts compared to the previous week. This change is due to the growth in long positions by 4,434 contracts and the growth of short positions by 7,524 contracts. This suggests bearish sentiment as the total net positions of large speculators are negative and at the same time there has been a decline in them.
Open interest has risen by 12,190 contracts in the past week, indicating that the move in the pound that occurred last week was supported by the volume and it was therefore weak price action.
The British Pound continued to weaken on the US Dollar pair last week, breaking through the 1.20 level with a strong daily candlestick. Overall, the British pound is in a strong downtrend.
 Long-term resistance: 1.2350 – 1.2400. The resistance is also 1.20.    Support: 1.1870 – 1.1920
 

The Australian dollar

Figure 3: The AUD and COT positions of large speculators on a weekly chart and the AUD/USD on D1

The total net positions of speculators last week reached 47,621 contracts, down by 4,641 contracts compared to the previous week. This change is due to a decrease in long positions by 1,265 contracts and an increase in short positions by 3,376 contracts. This data suggests bearish sentiment on the Australian dollar, as the total net positions of large speculators are negative while at the same time there was a decline in them in the previous week.
There was an increase in open interest of 7,059 contracts last week. This means that the move that occurred last week was supported by volume and it was therefore a strong price action.
The Aussie dollar is at a level of significant support where a reaction has occurred and the Aussie has strengthened a little in the past week. This is a temporary correction in an overall downtrend. 
Long-term resistance: 0.7040 – 0.7070
Long-term support: 0.6760-0.6780

The New Zealand dollar

Figure 4: The NZD and the position of large speculators on a weekly chart and the NZD/USD on D1

The total net positions of speculators last week amounted to -7,056 contracts, down by 1,745 contracts compared to the previous week. This change is due to an increase in long positions by 1,914 contracts and an increase in short positions by 3,659 contracts. This data suggests that there was bearish sentiment on the New Zealand dollar over the past week, as the overall net positions of large speculators have been negative, while there has been a further decline.
Open interest rose by 5,066 contracts last week. The move in NZD/USD that occurred last week was therefore supported by volume and therefore the move was strong.
The NZD/USD is moving very similarly to the AUD/USD pair in a downtrend and the pair has approached an area of significant support.
Long-term resistance: 0.6360 – 0.6400
Long-term support: 0.6120 – 0.6140
 

Explanation to the COT report

• The COT report shows the positions of major participants in the futures markets. Futures contracts are derivatives and are essentially agreements between two parties to exchange an underlying asset for a predetermined price on a predetermined date. They are standardised, specifying the quality and quantity of the underlying asset. They are traded on an exchange so that the total volume of these contracts traded is known.

• Open interest: open interest is the sum of all open futures contracts (i.e. the sum of short and long contracts) that exist on a given asset. OI increases when a new futures contract is created by pairing a buyer with a seller. The OI decreases when an existing futures contract expires at a given expiry time or by settlement.
• Low or no open interest means that there is no interest in the market. High open interest indicates high activity and traders pay attention to this market. A rising open interest indicates that there is demand for the currency. That is, a rising OI indicates a strong current trend. Conversely, a weakening open interest indicates that the current trend is not strong.

• Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument. Traders should try to trade in the direction of these large speculators.
• The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.
• The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.
• When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal.
• The COT data are usually reported every Friday and they show the status on Tuesday of the week.
• Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.