Hedge funds have shifted to bearish dollar bets as optimism over fresh US‑Iran talks rises. From early April, managers added short positions through a proprietary Morgan Stanley model, citing a potential ceasefire as a catalyst. The move signals a pivot from the greenback’s recent war‑driven rally toward a risk‑currency tilt that could reshape FX flows for international investors.

The Bloomberg dollar index surged 2.4% in March, its biggest monthly gain since July, before falling 1.9% in April and recording a seven‑day losing streak. Risk‑reversal data show call premiums—used to hedge against a stronger dollar—have narrowed relative to puts, suggesting traders now favor shorting the greenback rather than buying dips across most G‑10 pairs in cash and options today.

April 8 was called the heaviest dollar sell day seen in months by Nomura’s head of G‑10 spot trading, while HSBC’s FX cash chief noted that modest de‑de-dollarization is gaining traction through cheap option structures. SGMC Capital added bearish bets on the greenback after March’s rally, and JPMorgan analysts warn the dollar could retreat to year‑low levels if a durable truce materialises soon.