COMMENT-The growing dollar short is a problem
The growing dollar short is a problem: it reduces the odds of the decline many traders are hoping for and increases the likelihood that February's rally extends.
At the start of this year, traders were betting $3 billion on the dollar rising against major currencies; they are now betting $20 billion that it will fall. Including emerging-market currencies, the short is almost $23 billion. That's a $55 billion swing since the start of the trade conflict in January 2025, when traders were wagering nearly $35 billion on a stronger U.S. currency.
The dollar index, which fell to 95.56 in January, rose to 98.07 last week. While the dollar has dipped since the U.S. Supreme Court ruled against U.S. President Donald Trump's tariffs, the eventual unwind of short positions could support the dollar or boost it further.
A Reuters Asian FX poll on February 19 also showed traders selling dollars versus eight of nine currencies - either trimming longs or adding shorts - with positions against China's yuan and Malaysia's ringgit looking particularly significant.
The U.S. dollar's 2025 sell-off, which corrected past excesses, could be the foundation for a larger rise rather than the bigger decline many traders have been betting on. Those bearish wagers will certainly support the greenback, and there is potential for a short squeeze.
The correction of dollar's longer-term rise 
USD shorts and the USD index 
The correction of dollar's longer-term rise https://fingfx.thomsonreuters.com/gfx/buzz/mypmymblopr/Pasted%20image%201771837715237.png
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