Euro Shorts Hit an 11-Year Extreme as a Strong US Jobs Report Pushes the Dollar Above 102
Euro short positions held by large speculators have reached an 11-year extreme, just as a stronger-than-expected US jobs report pushed the dollar index back above 102 and dragged EUR/USD toward 1.11. The crowded trade now cuts both ways: momentum favours the bears, but positioning this one-sided is exactly the setup that produces violent short squeezes.
The positioning data comes from the latest CFTC Commitments of Traders (COT) report, covered by Forex.com's COT analysis. Follow the running coverage on the Zimbuck News page and trade-talk in the Zimbuck Market News group.
The numbers behind the extreme
- Euro net-shorts at an 11-year extreme among large speculators — the most bearish reading since December 2015
- Gross EUR/USD shorts at record highs, yet no sustained squeeze has triggered so far
- Dollar net-longs fell $1.8 billion for a third straight week but remain elevated at $35.6 billion
- Asset-manager euro net-longs at their lowest since October 2019
- EUR/USD bears are watching the May low at 1.1074, with momentum pointing toward 1.11 near term
Why the dollar is winning this week
The trigger was labour data. US nonfarm payrolls rose 165,000 in October against a consensus near 65,000, September was revised up to 60,000, and unemployment dipped to 4.1%. Average hourly earnings rose 0.4% on the month. That combination pushed market odds of a December Federal Reserve rate hike of at least 25 basis points back up toward 80% on the CME FedWatch tool, and the dollar index surged 0.77% to 102.26 — its biggest daily gain in nearly five months. EUR/USD fell 0.67% to about $1.11437, sterling dropped 0.71% to $1.3355 a day after the Bank of England's first hike in over three years, and USD/JPY rose to 158.430.
On the euro side, the headwinds are domestic as well as American: fiscal and political instability in France, weaker eurozone PMIs, and a currency that has failed for two weeks to capitalise on how bearish sentiment already was. The euro is on track for a third straight weekly decline.
Why crowded shorts are a risk, not just a signal
COT extremes do not time reversals by themselves — a crowded trade can get more crowded. But they change the risk maths. When nearly every leveraged fund is already short, there are few fresh sellers left, and any positive euro surprise (a budget deal in Paris, a soft US inflation print on November 10, or dovish Fed commentary) forces shorts to buy back into a thin market. That is the mechanics of a short squeeze, and it is why experienced forex traders treat an 11-year positioning extreme as a warning label on new shorts at market, even while the trend still points down. If the pip maths behind moves like this is new to you, start with our guide to pips, pipettes and lot size, and keep release dates straight with the forex economic calendar guide.
Levels and the week ahead
EUR/USD support sits at the May low of 1.1074, then the psychological 1.10 level that Rabobank's latest monthly outlook targets within three months. Resistance is the recent breakdown zone around 1.1200–1.1235. The next scheduled catalyst is US CPI on November 10, followed by US PPI later in the week; the FOMC decision lands December 9. Until CPI prints, positioning may stay cautious — but with shorts this crowded, the squeeze risk argues for smaller size and wider stops than a normal trend week.
FAQ
What is the COT report? The Commitments of Traders report is published weekly by the US CFTC and shows how futures market participants — asset managers, leveraged funds and others — are positioned in currencies and other contracts.
Does an 11-year short extreme mean EUR/USD will bounce? No. Extremes show vulnerability to a squeeze, not a guaranteed reversal. The trend can continue; positioning tells you the move could be sharp if the story changes.
Why did the dollar rise after the jobs report? Payrolls of 165,000 versus about 65,000 expected, with unemployment at 4.1%, revived expectations of a December Fed hike (odds toward 80%), lifting US yields and the dollar index to 102.26.
What level are euro bears targeting? The May low at 1.1074 first, with 1.10 below it — the level Rabobank forecasts within three months.
Track EUR/USD, the dollar index and the next COT release with other traders on Zimbuck — the finance social platform for traders & investors.
This article is market news and general information only, not financial advice.
