Traders turned positive on the US dollar for the first time this year as war in the Middle East jolts energy costs higher and supports the currency’s status as a haven.
Hedge funds, asset managers and other speculators have taken on $6.2bn worth of wagers that the dollar will strengthen as of March 17, according to Commodity Futures Trading Commission data released on Friday and compiled by Bloomberg. They’d been holding bets on a weaker currency since mid-December.
It marks a shift in sentiment in the $9.5-tn-a-day foreign-exchange market in the three weeks since the US attacked Iran. Alongside higher oil prices, a Bloomberg gauge of the dollar has risen about 2% in March, on pace for its biggest monthly increase since July.
Speculative traders have been pulling back from their negative bets on the dollar, according to CFTC data, after accumulating in mid-February about $22bn of wagers tied to a weaker greenback.
Since then, the dollar has shown a strong sensitivity to oil, often climbing alongside the price of the commodity. Haven buying has also supported the US currency.
“A shock-type event will have investors taking risk off the table in the initial stages. In this case, that means offloading short US dollar positions,” said Bipan Rai of BMO Asset Management. “There is the added appeal of liquidity and haven-ness that should help the dollar.”
The CFTC’s figures offer investors a glimpse into market sentiment, showing how hedge funds and asset managers are positioned in the currency derivatives market.
JPMorgan Chase & Co strategists last week turned positive on the dollar for the first time in a year and said the currency “stands out as the top defensive play across asset classes when both bonds and equities come under pressure.”
Pressure is mounting on other strategists who came into 2026 with expectations that the dollar would slide as the Federal Reserve lowered interest rates. But angst that a protracted conflict could keep energy costs elevated and ignite inflation has led traders to fully erased bets on rate reductions in the US. On Friday, bond traders lifted their wagers on a Fed rate increase by October to 50%.
“The war in Iran, and subsequent price surge in oil/energy markets, has blown the multiple-cut narrative to pieces and therefore accelerated the unwind in dollar shorts as traders reposition for rate hikes,” said Andrew Hazlett, a foreign-exchange trader at Monex Inc.
The Bloomberg Spot Dollar Index rose 0.5% on Friday.
