Wall Street’s Dollar Bears Take a Hit as Greenback Surges

The dollar’s back — and it’s catching traders off guard. After suffering its steepest first-half decline in decades, the greenback has roared back, with the Bloomberg Dollar Spot Index up about 2% since mid-year. Hedge funds are now piling into bullish bets as the euro and yen tumble, fueled by cautious Fed signals around further interest-rate cuts and political turmoil abroad.

The comeback marks a sharp turn from early 2025, when President Donald Trump’s tariff talk and pressure on the Fed sparked a wave of dollar selling. But those fears of foreign investors fleeing the US never quite materialized, as megacap tech stocks and steady overseas demand at Treasury auctions kept the money flowing in.