Major Wall Street investment banks are divided over how the dollar will move from here, yet much clarity could be just days away as a deluge of key economic data looms.
In an outlook shared with clients last week, Wells Fargo’s economics team, led by Nick Bennenbroek, expressed a bullish short-term stance on the U.S. dollar, calling the recent wave of depreciation “tactical” rather than the beginning of a structural trend.
“We expect the U.S. dollar to rebound in the immediate period ahead,” the analysts said, suggesting the dollar will remain fundamentally supported before resuming trend strength into 2026.
Bearish Positioning Builds As Speculators Eye US Economic Weakness
Speculative net short positions against the greenback — measured across 10 major currencies and the Dollar Index (DXY) — surged to $40 billion last week, the highest level since October 2023, according to Commodity Futures Trading Commission data.
The Dollar Index, as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), has dropped 8% year-to-date, reaching its most oversold levels since December 2020 last …