US Dollar: Firm tone extends with stretched positioning – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret note the US Dollar (USD) is strengthening on a higher-for-longer Federal Reserve (Fed) outlook, some haven demand and mixed global equities. US Dollar Index (DXY) is pushing toward 102, with stronger resistance seen in the upper 102 area. They warn markets may be overestimating Fed tightening risks and highlight already long speculative USD positioning as a potential constraint on further gains.

Dollar strength meets positioning risks

"More of the same for USD this morning, with a combination of a higher-for-longer view on US rates combining with some haven demand related to wobbly stocks and perhaps the realization that, despite positive soundbites, there are still some very significant gaps in US/Iran peace talks."

"The USD is firmer against all its major currency peers this morning and the DXY is extending towards the 102 point on the chart (the May 2025 high). Technically, stronger resistance may emerge in the upper 102 area, the 50% retracement of the 2025/26 drop in the index (102.86)."

"There’s not much to stop the USD from remaining firm or firming a bit further at this point. We think markets are overestimating Fed tightening risks but that issue won’t be clarified for some time."

"Positioning could be a constraint on dollar gains, however. Speculative positioning is running quite long USDs CFTC data suggests."

"Net USD longs in aggregate are nearing the highs seen in 2024 and early 2025 before the USD slipped off its peaks. Real money and hedge fund interest is lighter, which could give the USD a bit more of a tailwind, if bullish allocations are lifted."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD clings to multi-day peaks below 1.3500

GBP/USD trades with marked gains on Friday, now giving away some gains following an earlier surpass of the key 1.3500 yardstick. Indeed, Cable gathers fresh steam amid the strong offered stance in the Greenback, all after US NFP badly missed expectations in July.

EUR/USD: Post-NFP bounce falters around 1.1580

EUR/USD reverses Thursday’s decline and trades with solid gains in the 1.1560 region, or two-month peaks, on Friday. The pair’s firm performance comes in a context of a sharp correction in the US Dollar as investors continue to assess disheartening US NFP readings.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

XRP Price Forecast: XRP nears critical $1.00 support

Ripple (XRP) remains pressured on Friday, trading around $1.03 at the time of writing. The token appears to hold this current level as support but lacks a catalyst to sustain a knee-jerk rebound toward the next key resistance at $1.10.

Is Gold about to enter its biggest bull run since 2020?

Gold has stormed back into the spotlight and its next move could leave late buyers chasing. On August 5, the yellow metal surged almost 7% – roughly $174 – to close near $4,308 an ounce, posting one of its biggest daily advances in recent history. A weaker U.S dollar, falling Treasury yields, changing Federal Reserve expectations and renewed safe-haven demand all struck at once.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.