Dollar bulls’ bets remain high, Waller’s speech may trigger a position unwind

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智通财经2026/08/28 09:01

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Foreign exchange traders have already built up large bullish positions on the US dollar ahead of Federal Reserve Chair Walsh's Jackson Hole speech on Friday. Despite the US Dollar Index having fallen by around 3% over the past month, speculative long positions in the dollar have only decreased by about a quarter from the record $51 billion set in July.
As of the week ending August 21, US dollar net long open interest still remained at a high level of around $38 billion, with the euro and the Canadian dollar being the largest targets. Meanwhile, speculative funds are also positioning for appreciation of the US dollar against the Japanese yen, British pound, Swiss franc, as well as Australian and New Zealand currencies.
Regardless of whether Walsh's speech tone supports the current direction of bets, such concentrated positioning means an eventual clearing process is inevitable. If the speech matches hawkish expectations, the already crowded long side may limit further upside potential. However, if any dovish signals are released, it could trigger a stampede of position unwinding, amplifying downward momentum for the dollar.
The current low level of forex volatility provides considerable room for prices to react flexibly to unexpected information in the speech. In this low-volatility environment, any divergence from expectations can be rapidly priced in, with two-way risks significantly magnified.
Combined with widespread bearish expectations for various Asian currencies, the high concentration of US dollar positions leaves the market in a fragile rebalancing window ahead of the event. Regardless of the speech result, position adjustments themselves will become a key driving force for subsequent exchange rate movements.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Dollar bulls’ bets remain high, Waller’s speech may trigger a position unwind

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