Trump on Oil & Interest rates - Weekly Investor Positioning Report

This week, we observed heightened volatility in the USD and oil markets following statements by President Trump regarding oil prices and interest rates. Although interest rates do not fall under his mandate and energy prices are not currently the primary focus for economists—who are more concerned with core inflation (excluding food and energy)—he claimed he would take measures to lower interest rates once oil prices declined.

In this week's article, we will analyse investor positioning on both assets. Full report is available for download bellow.

EUR/USD Positioning:

In last week’s positioning report, we highlighted that investors held a notably pessimistic stance on EUR/USD. We noted that a potential mean reversion in this positioning could support an upward movement in the pair.

As the table above shows, this positioning mean reversion started to happen.

However, the table above indicates that positioning in the pair remains highly bearish, with all investors positioned below the 25th percentile.

As speculation surrounding Trump’s aggressive foreign policy begins to fade and investor positioning normalizes, EUR/USD could move higher, potentially testing its yearly moving average in the 1.06–1.07 range.

Oil Positioning:

The chart above displays the rolling yearly Z-score of investor positioning in oil. It highlights that since the elections, money managers have been aggressively increasing their exposure to oil, potentially as an inflation hedge. In contrast, retail investors have steadily reduced their positions, a trend that persisted until a slight reversal in the last couple of weeks.

The table above indicates that commercials and money managers hold a very bullish stance on oil, with positioning in the 80th+ percentile on a trailing twelve-month (TTM) basis. In contrast, retail investors appear significantly less optimistic, with positioning at just the 17.31st percentile.

Oil prices have risen over the last quarter but remain range-bound between $65 and $85. Given current positioning, we expect oil to stay within this range, as investors are already heavily positioned on the long side. Additionally, we anticipate that commercial investors will begin hedging their production at higher price levels, which could contribute to increased selling pressure.

Full Report:

Download the full report below. In the report you will find investor positioning insights for major equity indices, commodities such as gold, oil, gas, and silver, forex pairs and bitcoin.