The true US Dollar Index hits an all-time COT extreme as the Euro confirms the signal [Video]
The recent surge in the true US Dollar Index indicates a significant uptick in long positions, suggesting a bullish sentiment towards the dollar. This COT extreme, which aligns with signals from the Euro, hints at a possible tightening of monetary policy in the US that traders should closely watch. As the Euro trades at 1.1419, any further developments could catalyze shifts in sentiment across currency pairs, especially given the divergence in forecasts between major firms.
Where it sits in our coverage
Our consensus EUR/USD target stands at 1.1550 (median across 12 firms), with Commerzbank at the upper bound (1.2200) and BofA at the lower bound (1.1240). This positioning sees a wide range of expectations, reflecting varied outlooks on Euro strength against a strengthening dollar.
How firms align
Goldman sees a March target of 1.1800, positioning them in a bullish stance relative to our consensus, while BofA's recent downgrade to 1.1500 indicates a more cautious view. Other firms like Deutsche Bank and MUFG have also set higher targets, further indicating optimism toward the Euro.
What the data shows
Recent revisions show BofA lowering their 2026 forecast for March to 1.1700, suggesting potential shifts in sentiment; this aligns with our earlier research findings. For further details, see our published analysis at /research/eurusd-ecb-rate-path-2026-08-02.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01COT extremes signal potential for dollar strength in short term.
- 02Focus on Euro movements against the dollar for trading opportunities.
- 03March consensus target at 1.1550; revisions indicate shifting sentiments.
- 04Watch for changes in monetary policy rhetoric from the Fed.
Market implications
Next week, traders should keep an eye on the 1.1450 support level for the Euro, which could shift sentiment significantly. The consensus of 1.1550 indicates a critical threshold in the near term for any upside potential.
Risks to this view
Should the Fed signal a more dovish stance or if economic data points to weakness in the U.S. economy, this could invalidate the current bullish positioning on the dollar, prompting a reversal.
Sentiment by currency
USD+EUR JPY~GBP~Composite USD score: +0.75
Sources & References
How we cover this story
Other coverage on this pair
EUR/USD Weekly Forecast: US Dollar in trouble as Warsh chickens out
Fed official dovish positioning reduces near-term USD support and extends EUR/USD upside window into key resistance levels.
Euro: Range seen around mid‑1.15s against US Dollar – Scotiabank
Cable and EUR/USD are failing rallies [Video]
Failed rallies in GBP/USD and EUR/USD suggest USD strength persisting despite earlier optimism; momentum technicians likely repositioning long positioning.