The biggest sentiment reversal over the past year has been in FX — and specifically in the US Dollar.
The dollar has been one of the most unpopular assets in our universe for most of the past year. What began the Trump administration as a highly popular consensus long has steadily unwound, with positioning and sentiment shifting decisively bearish.
Liberation Day marked one of the key inflection points in that shift.
But in recent weeks, something has changed.
Against a backdrop of rising geopolitical tension and the war with Iran, the dollar has started to show signs of strength. Not a full reversal, but enough to shift its position in our Sentiment & Momentum Map into the top-left quadrant: still unpopular, but now with improving momentum.
That combination is often where the most interesting setups begin to emerge.
The key question is not whether the dollar has been bearish.
It is whether sentiment has become sufficiently one-sided — and whether recent price action signals the early stages of a shift in the narrative.
As always, this is not a call to “buy” or “sell” the US dollar. It is a sentiment note. And sentiment analysis is best used to do two things:
- Identify when consensus becomes sufficiently stretched that vulnerability shifts.
- Stress-test the prevailing narrative — what is priced, and what could force a rethink beyond geopolitics?
Sentiment & Positioning
We always start with the data.
Our Sentiment Matters Aggregate (SMA) for the US dollar has been below the 30th percentile for almost a full year. It dropped to the 5th percentile in September and currently sits at the 24th percentile.