Investors boosted short positions on the reserve currency to 321,758 contracts last week, the most since July 2021, according to data from the Commodity Futures Trading Commission on eight currency pairs compiled by Bloomberg. Hedge funds are similarly bearish: they sold the greenback for a fifth consecutive week.
“The dollar’s exceptionalism premium is receding as the Fed approaches maximum hawkishness,” said John Bromhead, strategist at Australia & New Zealand Banking Group Ltd. “The safe haven premium is also falling as the backdrop improves,” with the Europe energy situation looking less dire, he added.