Bearish FX Extremes Deepen as Cross-Asset Signals Diverge

The financial markets have seen significant changes in positioning and price movements across various assets. The Euro (EUR) has delivered the clearest bearish signal, with speculators cutting net positioning by 31,109 contracts, extending the selloff into a second week. This has pushed the net short to 72,447 contracts, below the 1st historical percentile. The EUR/USD price has also fallen modestly, confirming the flow rather than resisting an increasingly extreme position.

The Japanese Yen (JPY) has deteriorated for a second week, with net positioning falling by another 11,287 contracts to a 163,412-contract short, near the 2nd percentile. The USD/JPY trades have shown decent gains following the Yen's depreciation. The British Pound (GBP) joined the defensive reset after four covering weeks: positioning fell by 9,253 contracts.

The Australian Dollar (AUD) selling extended for a tenth consecutive week, with AUD/USD posting decent losses, ending the recent price divergence. The Canadian Dollar (CAD) remained deeply short with a modest weekly decline of 1,862 contracts. In contrast, the US Dollar (USD) positioning improved for a second week, with the US Dollar Index (DXY) clinching decent gains and completing a broadly defensive cross-currency picture.