G10 FX Rangebound as COT Extremes Pin Sterling and Yen; German CPI Looms for Euro
Week of 2026-05-25 – 2026-05-31
EUR/USD, GBP/USD, and USD/JPY saw minimal net moves over the week, with positioning extremes from the latest CFTC COT report anchoring price action. Large spec short in GBP and JPY keeps squeeze risk alive, while EUR longs remain light. Upcoming German state CPI and Eurostat print are the immediate catalysts for EUR/USD.
COT Positioning: Shorts Pile Into Sterling and Yen
The CFTC Commitment of Traders report as of May 19 showed large speculators net short 64,307 GBP contracts (22.5% of open interest) and net short 93,905 JPY contracts (23.7% of open interest). Both represent crowded trades by historical standards. EUR positioning is relatively neutral at net long 33,513 contracts (just 4.1% of OI), giving the pair less directional bias. These extremes suggest that any positive data surprise could trigger sharp short-covering rallies in GBP/USD and USD/JPY.
Price Action and Key Levels
EUR/USD closed the week virtually unchanged at 1.1648, holding above the psychologically important 1.16 handle. GBP/USD slipped 0.11% to 1.3429, unable to sustain a brief bounce from soft US PCE data earlier in the week. USD/JPY ticked up 0.01% to 159.27, remaining within its recent range. All three pairs are consolidating ahead of high-impact inflation data from Europe and Japan.
Outlook
The immediate focus is on May German state CPI releases and the Eurostat flash estimate on May 31. An upside surprise could lift EUR/USD toward the 1.18 resistance, while a soft print risks a break below 1.16. For USD/JPY, Tokyo CPI due this week is the key input; a core reading below the BOJ's 2% target will reinforce the yen's yield disadvantage and keep pressure on the pair. GBP/USD faces limited domestic catalysts, so the path of least resistance remains to the downside unless broader USD weakness materializes.
Calls to watch
Forward-looking statements from this briefing. Each is logged and will be scored against what happens.
- 50%EUR/USD trades above 1.17 by June 5 if German state CPI surprises to the upside · next week · EUR/USD
- 30%GBP/USD squeezes above 1.35 on any BoE hawkish rhetoric or better UK data · next week · GBP/USD
- 60%USD/JPY stays above 159 unless Tokyo core CPI prints above 2.0% · next week · USD/JPY
Sources
Grounded in AlphaScala signals and coverage. Educational only, not investment advice. Methodology: how briefings are produced.