empty
16.06.2025 12:14 PM
CFTC Report: The Dollar Is Being Sold Off Again. Awaiting New Revelations from Trump

Five weeks ago, the total short position on the U.S. dollar against major currencies stopped increasing, which gave reason to believe the dollar might begin an offensive in the currency market. However, the latest CFTC report showed this was merely a consolidation. Over the reporting week, the short position increased by $3.7 billion, led by growth in European currencies—primarily the pound and the euro—along with the Canadian dollar joining them. Changes in other currencies were minimal.

This image is no longer relevant

It should be noted that this report was outdated by the time it was published, as it does not account for recent developments. Some of those favor further dollar weakening and rising demand for risk assets. In particular, this includes easing tensions in trade relations with China, where both sides clearly want to reach a compromise, as well as the first signs of an agreement between Japan and the U.S. On Friday, it was announced that a long-term deal had been reached for U.S. LNG exports to Japan, totaling $200 billion. This agreement is clearly aimed at correcting the trade balance and is likely a concession from Japan, which may also commit to further investing in the U.S. economy or at least continue purchasing U.S. government bonds—something critically important in light of the impending increase in the U.S. budget deficit.

However, the threat of a full-scale war in the Middle East, initiated by Israel, demands a reassessment of risks in the opposite direction—namely, increased demand for safe-haven assets. August Brent crude futures opened the week above $78 per barrel, and if escalation continues, Iran's threat to block the Strait of Hormuz could become a reality. This hypothetical threat would primarily affect Europe. The U.S. would be forced to intervene, which could lead to completely unpredictable consequences.

So far, markets have reacted relatively calmly, apart from rising oil and gold prices. The Fed rate outlook remains unchanged: markets expect two cuts this year, in September and December. This forecast implies that U.S. bond yields will remain elevated.

This image is no longer relevant

Recent U.S. data has looked quite optimistic. The preliminary June University of Michigan Consumer Sentiment Index, published on Friday, rose from 52.2 to 60.5, and the Expectations Index increased from 47.9 to 58.4—both well above expectations. Additionally, there was a notable decline in 1-year inflation expectations, which indirectly signals continued strong consumer demand and pushes the threat of recession further into the future.

The May consumer inflation report came in below forecasts. Core inflation remained at 2.8% year-over-year, still above the Fed's target, but the key point is that the price growth situation appears fully under control, allowing the Fed to maintain its pause. Investors had feared that new tariffs would lead to product shortages in the U.S., thereby triggering price increases. So far, that hasn't happened, and thus there's no catalyst for dollar growth from that angle.

The stock market reacted to the large-scale bombings in Iran with a drop—but a shallow one—and quickly recovered a significant portion of the losses. This calm response is due to the currently minimal risk of the U.S. being drawn into the conflict, something Trump has no interest in.

The S&P 500 index remains near last week's levels. Attempts to continue its upward movement look feeble.

This image is no longer relevant

We assume that the probability of a decline to 5500 is higher than that of an update to the 6150 high. While risks are low for now, the index has been recovering from the sharp drop in April. However, the threat has not been eliminated—only postponed until July. The next two weeks will provide much more clarity, but for now, we still expect a decline in the index.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Gold prices are maintaining positive momentum for the second consecutive day. Ongoing uncertainty surrounding U.S. President Donald Trump's trade policy and its impact on the global economy continues to weigh

Irina Yanina 19:24 2025-07-10 UTC+2

USD/CHF. Analysis and Forecast

Today, the USD/CHF pair retraced part of its decline from a new weekly low recorded during the Asian session and has temporarily paused its downward movement, stopping short

Irina Yanina 12:26 2025-07-10 UTC+2

Market dupes sellers

The split within the Federal Reserve, NVIDIA's successes, and a successful auction of 10-year US Treasury bonds allowed the S&P 500 to ignore the tariff chaos. Donald Trump announced tariffs

Marek Petkovich 12:02 2025-07-10 UTC+2

What to Watch on July 10th: Fundamental Event Overview for Beginners

Macroeconomic Report Analysis: There are very few macroeconomic publications scheduled for Thursday, and none of them are expected to be significant. So what could traders focus on today? The second

Paolo Greco 09:07 2025-07-10 UTC+2

GBP/USD Overview on July 10, 2025

On Wednesday, the GBP/USD currency pair maintained its downward movement, which is corrective in nature and could end at any moment. The price remained below the moving average line

Paolo Greco 07:26 2025-07-10 UTC+2

EUR/USD Overview on July 10, 2025

The EUR/USD currency pair continued to trade very calmly on Wednesday. The pair maintained a slight downward bias, as we've noted in all of our recent articles. However, the current

Paolo Greco 07:16 2025-07-10 UTC+2

USD/CAD. Analysis and Forecast

Today, the USD/CAD pair is showing signs of recovery, rising toward the 1.3700 level and approaching the weekly high reached earlier. Fundamental factors point to bullish dominance and the potential

Irina Yanina 12:46 2025-07-09 UTC+2

Markets unfazed by Trump's new tariff threats

Donald Trump's bark is louder than his bite. Markets have grown so accustomed to his rhetoric that the S&P 500 barely flinched at the White House's latest threat to slap

Marek Petkovich 11:53 2025-07-09 UTC+2

AUD/USD. Analysis and Forecast

The AUD/USD pair is holding steady at current levels with a bullish bias but limited movement following the release of inflation data from China—Australia's key trading partner. In June

Irina Yanina 11:35 2025-07-09 UTC+2

USD/JPY. Analysis and Forecast

On Wednesday, the Japanese yen extended its decline for the third consecutive day, pushing the USD/JPY pair to a new two-week high above the key 147.00 level during the Asian

Irina Yanina 11:23 2025-07-09 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.