Speculative investors, including hedge funds and asset managers, have increased their bullish positioning on the US dollar to $27.8 billion as of June 9, marking the highest level since February 2025. This surge in confidence is largely attributed to the dollar's status as a safe-haven asset amid rising geopolitical tensions, specifically the US-Iran war in the Middle East, which began in late February.
The conflict has also contributed to a significant rise in oil prices, further supporting the dollar's strength. A Bloomberg gauge of the dollar has increased approximately 1.6% since the US and Israel attacked Iran, buoyed by haven buying and robust US economic indicators.
This shift represents a reversal from pre-war sentiment, when traders held about $22 billion in wagers on a weaker dollar. Speculative traders have now maintained net-long bets on the dollar for 13 consecutive weeks. Alex Cohen, a foreign-exchange strategist at Bank of America, noted that the fundamental picture continues to favor a bullish outlook for the dollar.
Alongside the dollar's strength, leveraged funds have simultaneously boosted their negative bets on the Japanese yen to levels not seen since 2017, as the yen trades around 160 against the dollar. These insights are derived from Commodity Futures Trading Commission (CFTC) data, which provides a snapshot of sentiment in the vast $9.5-trillion-a-day foreign exchange market based on derivatives positioning.
