Traders Ramp Up Short Dollar Bets as Fed Pivot Looms, Risking Market Volatility
Hedge funds and macro traders are accelerating bets against the U.S. dollar, anticipating the Federal Reserve's tightening cycle may soon reverse. Crowded short positions reflect growing consensus that rate cuts loom amid fiscal deficits and dedollarization trends.
The dollar's weakness could Ripple across asset classes. Gold and emerging market currencies have already benefited, while crypto markets may see amplified volatility from currency-driven liquidity shifts. Derivatives markets show extreme positioning that could unravel violently on any hawkish Fed surprise.