A new survey conducted by the Bank of America is showing the most bearish stance on the US dollar to date. The new survey, which revealed record US dollar short positions, betting primarily on its decline, may end up creating more issues for the USD, as the investors believe that the US dollar is down for more volatility ahead.

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BoFA Survey and US Dollar Crash Dynamics

The dollar’s current positioning has been deemed the most volatile and bearish in a decade. A recent survey conducted by the BofA, as reported by Investing, revealed staggering new details about the USD shorts. A recent BoFa FX and rates sentiment survey revealed record USD short positions hounding the US dollar, with net exposure towards the USD hitting new lows. The investor sentiment is now tilting towards a possibility of USD decline, stating how the investor confidence towards the American currency is constantly declining.

This positioning reflects a new narrative, stating that the trust in the US dollar is now rapidly diminishing. Moreover, market enthusiasts are now viewing the dollar as a volatility tool, driven compulsively by the Fed’s changing outlook and the US’ questionable policymaking. Fed institutional independence is also being questioned under Trump’s rule, weighing more on the dollar.

Moreover, the survey also adds how the market participants believe that the further decay of the US labor market might fuel the dollar spiral drive.

“The US labor market is deteriorating. The number of Americans working multiple jobs hit a record 9.3 MILLION. Surpassing peaks seen during the 2008 Financial Crisis and the 2020 Crisis. At the same time, average weekly hours worked have fallen to 34.5 hours, near the lowest since the Financial Crisis. The gap suggests workers are taking 2nd and 3rd jobs not by choice but out of necessity. As hours are cut and primary employment fails to provide sufficient income. The job market is WEAK.”

Biggest Sentiment Shift Since 2012

The BofA survey also highlights the gravity of the situation, outlining how this is the biggest bearish sentiment shift for the dollar to combat since February 2012. Speculative bets against the USD are increasing as traders anticipate a decline in its value soon.

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