The greenback has declined this year amid worries the Trump administration’s policies may cause a recession in the US
| Photo Credit:
Dado Ruvic

Foreign exchange traders are battling to hold onto their bearish dollar positions after the currency’s two-day rally. 

While Bloomberg’s gauge of the dollar fell to the lowest level since 2023 on Monday, it then rose 1% over the two days through Wednesday, pressuring bets on a weaker greenback. 

“A healthy amount of the more tactical positioning has been cleaned out,” said Jerry Minier, co-head of G-10 FX trading at Barclays Plc in London. By Tuesday and Wednesday, market participants were “back and ready to fade the extremes.” 

The greenback has declined this year amid worries the Trump administration’s policies may cause a recession in the US. Its rally this week came after President Trump said he had no intention to remove Federal Reserve Chair Jerome Powell and appeared to ease his stance on China tariffs. 

Some market participants appear to have been caught off guard.

Illiquid moves “stopped out some people who had sold the dollar on the break of pivotal 1.1500 and 140 levels in euro-dollar and dollar-yen respectively,” said Antony Foster, London-based head of Group-of-10 spot trading at Nomura International Plc.

Speculators’ net bearish positions on the greenback against 10 currencies and on the Dollar Index surged to $40 billion last week, the most since October, based on data from the Commodity Futures Trading Commission. 

Longer-term conviction still leans toward a weaker greenback, according to Nomura’s Foster and Brent Donnelly, New York based president of Spectra FX Solutions LLC.

“We are in a regime shift to sell the dollar,” Donnelly said.

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Published on April 24, 2025