Analysts are flagging growing near-term risks from overcrowded short positions in the U.S. dollar, raising the possibility of a sharp reversal that could ripple across risk assets, including cryptocurrencies.
What Happened: According to market commentary from QCP Capital, the consensus bearish narrative on the dollar, fueled by the ongoing tariff war and expected monetary easing, may be approaching exhaustion.
“With the dollar already down 10% year-to-date and CFTC data showing extreme short positioning in USDJPY, the market appears vulnerable to a short squeeze,” the firm noted.
Such a reversal, they argue, could trigger risk-off positioning across equities, …