The CFTC in the United States reports that net positions for the S&P 500 have shifted from $-944K to $-106.1K. This change is happening alongside various market movements. The EUR/USD ended last week at around 1.1640, showing a 0.7% loss as the dollar remains strong. Meanwhile, GBP/USD has dipped below 1.3400 and is now looking towards the 200-day SMA.

Gold Market Surge

Gold prices are rising, climbing above $4,500, and are set for a weekly gain of 4%. In addition, the AUD/USD has fallen as the US dollar gains strength, driven by US labor data and disappointing inflation figures from Australia. In 2026, leading brokers will be highlighted for traders based on their specific needs. These include brokers with low spreads, those focused on forex, and options for markets like EUR/USD, MENA, and LATAM. FXStreet notes that all information provided is for informational purposes only, with no recommendations for buying or selling assets. Investing carries risks, and FXStreet is not responsible for any potential errors or losses. They do not give personalized financial advice, and the author does not hold positions in the stocks mentioned. Recent data indicates a significant shift in sentiment for the S&P 500, as large speculators have mostly covered their short positions. Net bearish bets went from over $944,000 to just over $106,000. This suggests that the extreme pessimism seen in late 2025 is fading fast.

Market Confidence Surge

This covering of shorts is happening alongside the December 2025 CPI report, which showed inflation at 4.8%, indicating that it may have peaked. Current market pricing shows less than a 50% chance of a Fed rate hike in March, a major change from earlier predictions. The S&P 500’s recent rise above the 6,000 mark supports this renewed confidence. For those trading derivatives, the swift closing of short positions is likely to increase volatility in the weeks ahead. As shorts are bought back, upward pressure may lead to sharp price rallies. This means strategies like buying call options or selling out-of-the-money put spreads could be beneficial. The strong US dollar, which was a significant challenge for equities in 2025, appears to be losing its grip as the main market driver. However, gold’s price remaining above $4,500 an ounce suggests that fears of ongoing inflation aren’t entirely gone. This shows that while the market is optimistic, there remains a layer of caution. We have seen similar situations in the past where a perceived peak in the Fed’s aggressive stance led to a rapid reversal in speculative positioning. The market conditions in late 2023, following a lengthy period of rate hikes, highlight a useful historical parallel for this kind of sentiment change. This implies that buying dips might be a more effective strategy now than in recent months. Create your live VT Markets account and start trading now.

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