Hedge funds are increasing their bets against the US dollar, with options activity pointing to growing conviction that the currency’s recent position weakens further as safe-haven demand eases, according to a report by Bloomberg.
Trading volumes in euro-dollar options surged sharply at the end of last week, with bullish positions on the euro outpacing downside hedges. Similar patterns were seen in other G10 currencies, including the Australian dollar, where call option demand has strengthened relative to puts—typically signalling a more risk-on stance among investors.
The shift comes as the dollar continues to slide through April, pressured by improving geopolitical sentiment following signs of de-escalation between the US and Iran. A sustained ceasefire has reduced demand for defensive assets, weighing on the greenback.
Market participants say both hedge funds and institutional investors have been actively positioning for further dollar weakness via options markets. Lower implied volatility has also made bearish dollar strategies—such as buying puts or put spreads—more cost-effective.
Across European trading desks, flows have increasingly favoured currencies including the euro, Australian dollar and Canadian dollar as alternatives to the US currency.
While geopolitical developments remain a key driver, attention is also turning to upcoming policy signals and macro catalysts that could shape the dollar’s next move.
