FX market sentiment mixed as commodities surge, indices heavily bought

Foreign exchange markets displayed mixed sentiment patterns entering 2025, with notable divergence across major currency pairs. Market positioning data reveals extremely bullish commodity exposure, supporting commodity-linked currencies like AUD and CAD against traditional safe havens. EUR/USD sentiment remains neutral despite recent volatility, while GBP/USD faces headwinds from persistent UK economic uncertainties. USD/JPY continues to attract buying interest as the Bank of Japan maintains its ultra-loose monetary stance, contrasting with the Federal Reserve's hawkish pivot. The extreme long positioning in commodities, particularly energy and metals, suggests potential spillover effects into resource-dependent currencies. Risk-on sentiment dominates equity indices with heavy buying flows, potentially limiting demand for defensive currencies like CHF and JPY. Traders should monitor commodity price action closely as any reversal could trigger significant FX realignments, particularly in AUD/USD and USD/CAD pairs.