The market is increasingly turning against the US dollar, with short positions at their highest level since January 2012, according to Bank of America’s foreign exchange and rates sentiment survey.
This shift in sentiment comes as the US Dollar Index, which tracks the value of the greenback against a weighted basket of six major currencies, has declined 1.3% year to date.
The latest Bank of America survey finds dollar positioning in February reached its most negative level in more than 14 years. Moreover, overall dollar exposure has fallen below the lows of April 2025, signaling continued loss of confidence among fund managers.
Despite efforts to restore confidence in the Federal Reserve, skepticism remains. President Trump’s January 2026 nomination of Kevin Warsh as Fed Chair aimed to reassure investors in US monetary policy. Nevertheless, this move has not lifted dollar demand.
Meanwhile, the bearish sentiment comes amid a substantial slide in the US Dollar Index. In 2025, the index fell 9.4%, with declines continuing this year.
On January 27, DXY fell to 95.5, its lowest level since February 2022. At the time of writing, DXY recovered to reach 97.08.
Market analysts are increasingly pointing to technical signals that point to further downside for the US dollar. Trader Donny forecasted that the index could decline below the 96 level.
Other analysts are looking even further out. The Long Investor highlighted longer-term charts that, in his view, outline a much deeper structural decline. He suggested that bearish targets could extend into the 52–60 range over the 2030s.
However, some analysts see potential for a dollar rebound. The Macro Pulse stated recent behavior suggests the index may be entering a “potential bottoming process.”