Yen Bears Capitulate, Dollar Nearing Sentiment Extreme? | COT

The latest CFTC Commitment of Traders report, available via weekly COT data, shows yen bears are losing conviction. Net short yen positions fell sharply last week as the dollar's rally stalled near the 160 level. The aggregate dollar long position climbed to a 20-year high. Bullish bets on the dollar are now concentrated in the euro and New Zealand dollar, where bearish positioning continues to build. Canadian dollar shorts also grew.

The extreme dollar positioning has drawn attention from traders who watch sentiment extremes. Prior instances of such concentrated bullishness have often preceded a dollar decline. The yen's recovery suggests a shift in the carry trade dynamic, especially with the BOJ's rate path diverging from the Fed's.

The data covers the week through Tuesday. The next COT release is scheduled for Friday.