Investors Turn Record Bearish On The Dollar – Is This The Final Flush?

Global investors are much bearish connected the U.S. dollar than astatine immoderate constituent successful astatine slightest 14 years, according to a caller survey by Bank of America.

The February survey reveals that USD positioning has fallen to the astir underweight level successful the bank's information acceptable going backmost to January 2012.

In different words, investors are holding little dollar vulnerability than ever recorded successful the survey's history. Dollar’s underweight positioning has present surpassed the erstwhile lows seen during the Trump’s tariff daze successful April 2025.

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What makes this displacement peculiarly striking is the backdrop.

“Following the information of Warsh arsenic the caller Fed chief, worries regarding Fed independency has meaningfully abated. However, it did not construe into greater request for the dollar nor renewed optimism connected US assets,” said Ralf Preusser, CFA.

Instead, investors stay skeptical. Most present accidental they similar to summation FX hedge ratios oregon actively trim U.S. plus exposure.

Expectations are gathering that planetary reserve managers volition proceed reducing their dollar allocations, with a increasing number anticipating an accelerated gait of diversification.

In short: the dollar has go a statement underweight.

Earlier this month, Atlanta Fed President Raphael Bostic said he’s seeing aboriginal signs that assurance successful the US dollar is being questioned. He warned specified doubts could make “rippling successful the valuation of the dollar.”

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There’s a applicable caveat here.

Most survey responses were collected earlier the latest stronger-than-expected U.S. jobs report.

Last month, nonfarm payrolls importantly exceeded expectations, rising by 130,000 versus forecasts of 70,000 — a crisp acceleration from December's 48,000 gain.

On apical of that, the unemployment complaint unexpectedly slipped from 4.4% to 4.3%.

That resilience successful economical information is seen by astir fractional of respondents arsenic the superior imaginable near-term catalyst for a dollar rebound.

Beyond the near-term economical data, determination whitethorn beryllium a much structural unit helping to bounds further downside successful the dollar.