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Hedge Funds Pivot to Bearish Dollar Bets on US-Iran Talks Optimism

George Lei, David Finnerty
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⚡ Quantum Brief
Hedge funds are rapidly shifting to bearish positions on the U.S. dollar amid growing optimism over U.S.-Iran peace talks, reversing gains tied to earlier war-driven currency strength. A two-week ceasefire extension between the U.S. and Iran has weakened the dollar’s safe-haven appeal, prompting investors to unwind long positions accumulated during geopolitical tensions. Morgan Stanley’s proprietary trading model confirms increased bearish dollar bets through April 10, signaling broader market sentiment as diplomatic progress reduces risk premiums. The dollar’s decline reflects broader macroeconomic adjustments, with traders pricing in reduced geopolitical uncertainty and potential easing of Middle East-related economic disruptions. Analysts warn the trend could accelerate if negotiations yield a lasting agreement, further eroding the currency’s recent haven-driven rally.
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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000War With Iran:The prospect of a possible peace deal have seen the dollar unwind almost all its war-driven strength. Hedge funds are increasingly downbeat on the dollar as the prospect of a two-week ceasefire extension between the US and Iran sap the currency’s war-driven strength. Investors added to their bearish dollar trades this month through April 10, based on a proprietary trading model from Morgan Stanley.

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Source: Bloomberg

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