US Dollar Long Term Chart with Commitments of Traders as of April 29 COB

So far the dollar rally looks like a technical bounce similar to ones we have had in the past when the dollar sets a lower trendline, bounces off it, and then falls back and tests it after a three or four week rally.

The COT report for this week was as of April 29 at the Close of Business. It appears that the Small Speculators are leading the charge higher and are holding a much more significant net long in the dollar than is usual. The Fund are still slightly net short, and the net large traders move negative for the week.

Based on past experience the dollar rally will get a severe test next week, during which time the small specs will get nailed by the funds, unless official intervention is underpinning the dollar, in which case we'd look for the funds to get net long ASAP. They don't often miss that sort of signal.

Its often hard to 'read' the more complex traders positions because they tend to have so many cross market hedges, and the DX is ripe for that because it is merely an artificial basket of currencies.

Still, the Dollar is firmly in a downtrend and must rally quite a bit more to prove that we are seeing a real trend reversal.