Dollar Bulls Tighten Grip as Yen Bears Pile In
US dollar bulls tightened their grip on the market as the dollar index hit a 10-year high, according to the latest COT report. Large speculators increased net-long exposure to the US dollar by $4.1 billion, reaching a fresh 10-year high of $42.6 billion. Meanwhile, traders continued to bet against the Japanese yen, pushing net-short exposure to near a two-year high.
The recent rally in the US dollar can be attributed to the Federal Reserve's hawkish stance and expectations for further tightening. The central bank's willingness to raise interest rates has made the dollar more attractive to investors, leading to a surge in demand for the currency. This trend is expected to continue, with some analysts predicting that the dollar index could reach 102 if the Fed strikes a particularly hawkish tone.
The euro and other commodity currencies also saw significant changes in futures positioning. The EUR/USD saw large speculators increase net-short exposure to a 17-month high of 41.4k contracts, while the GBP/USD saw a decrease in net-short exposure for a fifth consecutive week. However, the USD/JPY saw a sharp increase in bearish bets against the yen, with traders adding 44.5k net-short futures contracts last week alone.