Large currency speculators in the US dollar futures market turned net long, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC). The non-commercial futures contracts of US dollar index futures, traded by large speculators and hedge funds, totaled a net long position of 850 contracts in the data reported through May 26, 2026. This represents a rise of 1,329 net positions compared to the previous week, marking a significant shift in speculative sentiment toward the dollar. The Bloomberg Dollar Spot Index has posted only its fourth monthly gain since the greenback's 2025 downtrend began, with the gauge up 0.6% in May as investors ramped up bets that the Federal Reserve will raise rates by early 2027.
Financial markets are pricing approximately 25 basis points of Fed hikes by May 2027, compared with over 60 basis points for the ECB and less than 40 basis points for the Bank of England. The European Central Bank and Bank of Japan are expected to hike closer to the federal-funds rate in the coming months, continuing the trend of convergence between the US and rest of the world. Inflation stayed well above 2% in the euro zone's four top economies, prompting ECB Governing Council member Gediminas Simkus to talk about a second rate increase after June. Swaps signal a BOJ rate increase of 40 basis points by year-end. As per Morgan Stanley's global head of macro strategy Matthew Hornbach, "The macro backdrop supports a softer dollar."
The US dollar has strengthened to near one-week highs as Iran's Revolutionary Guard targeted a US airbase on Thursday, hours after President Trump rejected a compromise deal with Tehran. According to Reuters, the dollar index rose 0.11% to 99.33, after touching 99.546 in Asian trade - its highest level since April 7. The surge follows Trump's rejection of a reported compromise deal, with Iran's Revolutionary Guards responding by targeting a US airbase in Bandar Abbas. This latest escalation has reinforced the dollar's safe-haven appeal amid growing geopolitical uncertainties, particularly as doubts grew over prospects of a deal to reopen the Strait of Hormuz. The dollar had initially surged in March after Iran's effective closure of the Strait of Hormuz sent oil prices higher, hitting importers such as Japan and the eurozone.
The world's wealthiest families are reassessing their dependence on the US dollar amid rising geopolitical tensions and growing concerns over sovereign debt, according to UBS's Global Family Office Report 2026. The survey by the Swiss bank found that nearly two-thirds of family offices expect confidence in the US dollar as a global reserve currency to weaken over the next year, signalling a broader rethink of portfolio concentration around US assets. The findings are based on a survey of 307 UBS clients worldwide conducted between January and late March 2026, before the dollar began outperforming several major currencies. As reported by Reuters, the survey was published on Thursday, highlighting the ongoing shift in wealthy family office strategies amid the current geopolitical environment.
Almost a third of the 307 private investment firms surveyed have already cut or plan to reduce allocations to assets held in US dollars, according to UBS's 2026 Global Family Office Report. The same sentiment for other major currencies, such as the British pound and Euro, was less than 10 per cent. Overall, 60 per cent of the family offices polled said they planned to make strategic allocation changes to their portfolios this year, the highest level in UBS's report since at least 2020. Allotments to developed markets and reductions to real estate are among popular options as part of the rebalancing strategy. As per Bloomberg, Yves-Alain Sommerhalder, head of global wealth management solutions at UBS, noted there's a rebalancing going on against the more uncertain investment backdrop. The shift is largely shaped by the more aggressive foreign policy of President Donald Trump in his second term, with Europe's wealthy elite already reassessing their US exposure following Trump's efforts to gain control over Greenland and intervention in Venezuela.
