I’m pretty busy this morning but wanted to get this one chart posted. The dollar has been rallying since February and the PowerShares U.S. Dollar Bullish ETF ($UUP) is up a little over 4% from its 2013 low. This bounce in the dollar has caused a large shift in bullishness for the U.S. currency, with long positions hitting record highs based on COT data.
Here’s a chart produced by SentimenTrader via Business Insider that shows the number of net long positions of large speculators (which are primarily hedge funds) in the dollar hitting record highs. It’s important to note that past peaks in net long positions have not been associated with highs in the dollar. Just like in equities, we typically see sentiment top out before price does. So while it’s possible for the dollar to take a breather, this frothy sentiment isn’t as short-term bearish as some would have you believe.
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