Dollar COT Chart
Here is a snippet of the newsletter we just sent to DeCarley brokerage clients and our newsletter subscribers - The dollar index is the ETF of the futures world; it represents a basket of currencies paired against the dollar. The most heavily weighted currency is the euro at roughly 60%, but the yen, pound, and others are included in the basket. The dollar index is traded on the ICE exchange, which prevents speculators from utilizing it as much as they might otherwise. ICE exchange products come with the baggage of expensive price data subscriptions and odd trading hours. Even so, we believe it is imperative to keep tabs on the dollar because currency markets are generally steering the ship in relative secrecy. The green line at the bottom of the dollar chart below represents large speculators. This chart spans over two decades and reveals an obvious pattern: any time long speculators go slightly net short, as represented by a decline below the center of the graph, the greenback tends to bottom and then subsequently rally as speculators cover shorts and begin accumulating long positions again. This is important because in 2025, large speculators held a small net-short position but have since begun accumulating longs. If this pattern repeats in the same way it has habitually done, we should see the dollar strengthen. Remember, a stronger dollar is a headwind for stocks and commodities and would likely be a tailwind for bonds (higher Treasuries and lower interest rates).