The foreign exchange market is showing signs of investors pulling back from risk, especially ahead of upcoming U.S. tariff deadlines. According to UBS analysts, both asset managers and traders who usually take more aggressive positions have been selling off their U.S. dollar holdings.
This shift has mainly helped the euro and British pound. What’s interesting is that just a few weeks ago, most investors were betting against the pound—but now they’re backing it. A similar turnaround has happened with the euro, where short-term traders have gone from expecting it to fall to now expecting it to rise.
UBS says this change isn’t because of interest rate shifts or other major economic signals. Instead, it’s likely because investors are choosing to reduce their exposure to the dollar after holding bullish positions for months. In short, people are playing it safer and moving their money out of the dollar.
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