Key facts
- Investors increased dollar allocations in June, anticipating potential Federal Reserve rate hikes.
- Net dollar positioning is now a 3% underweight, the least bearish since March 2025.
- Only 34% of investors now see the dollar as overvalued, down from 50% in May.
- Most investors expect the Federal Reserve to hold rates unchanged at its upcoming meeting.
- A majority anticipate a "hawkish hold" with Chair Kevin Warsh signalling higher-for-longer policy.
Investors have shown a less bearish sentiment towards the U.S. dollar in June, increasing their allocations to the currency. This shift in positioning is largely driven by expectations of potential interest rate hikes by the Federal Reserve. According to a survey conducted by Bank of America, net dollar positioning has moved to a 3% underweight, marking the least bearish stance observed since March 2025. Furthermore, the proportion of investors who consider the dollar to be overvalued has declined significantly, falling to 34% in June from 50% in May. Most investors anticipate the Federal Reserve will maintain its current interest rates, with a majority expecting a "hawkish hold" and Chair Kevin Warsh indicating a higher-for-longer policy.