The U.S. dollar is heading for a weekly decline, while analysts at Bank of America Securities report that underweight positioning in the currency has reached record levels.
At 08:15 ET (13:15 GMT), the Dollar Index — which measures the greenback against a basket of six major currencies — rose 0.1% to 96.915. Despite the modest gain, the index remains on track for a weekly loss of roughly 0.6%.
According to a note from Bank of America dated February 13, concerns about Federal Reserve independence have eased following the nomination of Kevin Warsh as the new Fed Chair. However, this development has not translated into stronger demand for the U.S. dollar or renewed confidence in U.S. assets.
Investor positioning in the dollar has now fallen below the lows recorded in April 2025, reaching levels not previously observed since Bank of America began tracking the data in January 2012.
The bank also noted a growing preference among investors to increase foreign exchange hedge ratios or scale back exposure to U.S. assets. Additionally, expectations of continued reductions in U.S. dollar holdings among global reserve managers have strengthened, with more participants anticipating a faster pace of portfolio rebalancing.
However, Bank of America cautioned that most survey responses were collected before the release of the latest upbeat U.S. jobs report. Strong labor market data could soften some of the bearish sentiment, particularly as resilient economic indicators and shifting Federal Reserve expectations are seen as key near-term support factors for the dollar.
