Good morning. In 1995, a rogue trader named Nick Leeson brought down Barings Bank, one of the oldest banks in the UK by hiding $1.4 billion in losses through unauthorized trades.

He started in the back office… and ended up bankrupting a 233-year-old institution.

-Shaun A, Jonathan Kibbler, Jordon Mellor

MARKETS

Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.

TRADER INSIGHTS

If you’ve been in the trading game for more than five minutes, you’ve probably heard someone say:

“Just follow the CFTC positioning. The smart money always wins.”

Sounds easy, right? Pull up the Commitments of Traders (COT) report, copy what the big boys do, and boom, Lambo season.

Reality check: It’s not that simple. But does that mean the CFTC report is useless? Absolutely not. In fact, if you know how to read it properly, it can be one of the most powerful tools in your macro toolbox.

The Commodity Futures Trading Commission (CFTC) releases the Commitments of Traders (COT) report every Friday at 3:30 p.m. ET. It shows the positions of traders in U.S. futures markets—including currencies, commodities, and indexes, based on data from the previous Tuesday.

For us forex traders, this means you can see how large speculators (hedge funds, CTAs), commercial hedgers, and retail-sized traders are positioned.

Because positioning = sentiment. And sentiment drives price moves, especially when it gets too one-sided.

The COT report isn’t a crystal ball, but it tells you where the pain trade lives.

The biggest complaint about the COT report? It’s delayed. By the time you see the numbers Friday, they’re already three days old.

In fast-moving markets, that’s an eternity. But here’s the thing: The COT isn’t about short-term scalps. It’s about macro positioning trends.

When you notice specs piling into long USD positions for eight straight weeks, that’s a signal: The market is all-in on one narrative. If fundamentals shift, you’ve got a powder keg for a reversal.

Don’t just look at the raw number of contracts. Instead, focus on:

It’s also best to combine it with price action, economic data, and central bank guidance.

The CFTC report isn’t the ultimate forex signal, but it’s like an X-ray of market positioning. When paired with rate differentials, liquidity, and major event risks, it becomes a powerful tool. Its real edge shows when positioning hits extremes, fundamentals shift, and volatility flips from calm to chaos, perfect conditions to spot trend reversals before the crowd.

The CFTC report isn’t a trading system. It’s a sentiment map, and sentiment always matters. Ignore it, and you’re flying blind. Use it with context, and it becomes your early-warning radar for big positioning squeezes.

Smart traders don’t just chase what the “big money” is doing, they figure out when the big money is trapped. And that’s where the real alpha hides.

-Shaun A

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TRADER INSIGHTS

EUR/USD has had a strong run since the beginning of the year, bouncing from near 1.0200 to just under 1.1800. But now, renewed USD strength has put doubts into the buyers mind.

Yesterday’s US–EU trade deal removed a major risk overhang (good news for global markets), but not surprisingly, the Euro sold off sharply, dropping below key support and psychological level at 1.1600, hinting at a reversal.

The US-EU framework agreement struck in Scotland set a 15% tariff on nearly all EU exports,  less than the 50% initially threatened. This sparked relief… but not clarity.

Key sectors like steel and aluminum remain at a 50% tariff, contrary to EU expectations. Even more confusing: pharmaceuticals. Trump claimed they were excluded from tariffs, but US officials later said they’re included at the 15% baseline. This contradiction, along with unresolved issues in aerospace and energy, casts doubt over implementation and may create market volatility as final terms evolve.

For EUR/USD traders, this means any euro-positive sentiment from the deal could be fragile at best.

The latest Commitment of Traders (COT) report shows non-commercials (hedge funds) are the most bullish on the euro in over a year. This is important. When positioning reaches extremes, markets often reverse. Why? Because there are few buyers left to keep the move going.

My currency strength meter also supports the downside in the EURO. Just a couple of weeks ago the currency was at +5 (very strong) and now it sits at +3 highlighting the weakness that has entered the market. 

The Euro’s momentum could be fading. With stretched positioning, bearish price action, and a resurgent dollar, the path of least resistance may be down.

-Jonathan Kibbler

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