Published by Global Banking & Finance Review®
Posted on March 5, 2025
3 min readLast updated: January 25, 2026
The US dollar is expected to decline as trade war uncertainties and declining long bets weigh on its strength, according to a Reuters poll.
By Sarupya Ganguly
BENGALURU (Reuters) - The U.S. dollar may hold most of its strength over coming months, even as a once-crowded dollar trade thins out amid confusion over U.S. President Donald Trump’s tariff plans and mounting worries about the economy, a Reuters survey found.
After several erratic announcements and delays, Trump has started a trade war with America’s three largest trading partners, levying 25% tariffs on traditional allies Canada and Mexico and additional import duties on goods from China.
Combined with weeks of speculators unwinding near-decade high net-long dollar positions, that pushed the greenback down nearly 2.5% against a basket of major currencies this week, according to data from the Commodity Futures Trading Commission.
A near-60% majority of currency strategists, 18 of 31, in a March 3-5 Reuters survey predicted net-long dollar bets would decline further by end-March. Eight said there would not be much change, while only five expected an increase in net long positions.
Responses to the latest FX poll come both before and after the latest tariff announcements.
It was also taken mostly before a surge in the euro following news parties hoping to form Germany's next government agreed on Tuesday to create a 500 billion-euro ($534.75 billion) infrastructure fund and overhaul borrowing rules to revamp the military and revive growth in Europe's largest economy.
"The risks to the dollar outlook over the next few months are even-sided. On the one hand, tariffs and elevated geopolitical uncertainty support a stronger dollar. On the other hand, shifts in German fiscal policy and the disruption across multiple fronts pose downside risks. We are therefore neutral," said George Saravelos, head of FX research at Deutsche Bank.
"The large degree of uncertainty will prevent a large rise in dollar positioning in both directions."
The euro, currently $1.07 and up nearly 3% against the dollar since early-Monday, was expected to fall to $1.03 in three months and trade at $1.04 in six, survey medians showed, roughly the same as in a February survey, suggesting forecasts may soon be revised.
From October to early January, the dollar rose nearly 10% on continued resilience in U.S. economic data and expectations the Federal Reserve had only one or two more interest rate cuts left to deliver.
The dollar has since fallen about 5%, with a majority of those losses in the last few weeks based on signs of economic weakness, leading to interest futures pricing three Fed rate reductions by year-end.
"The world is long U.S. assets to a degree it has never been before and if they get scared of being on those assets, that will be the single biggest driver of dollar weakness going forward," said Kit Juckes, head of FX strategy, at Societe Generale.
"My biggest underlying concern with the dollar is that even after so many years of exceptionalism that have taken it to levels it hasn't seen since 1985 in real effective terms, it only takes a few chinks in the armor for it to look weaker."
(Other stories from the Reuters March foreign exchange poll)
($1 = 0.9350 euros)
(Reporting by Sarupya Ganguly; Polling by Purujit Arun and Aman Kumar Soni; Editing by Hari Kishan, Ross Finley)
The US dollar may maintain its strength in the coming months, but a majority of currency strategists predict that net-long dollar bets will decline further by the end of March.
The imposition of tariffs by President Trump has contributed to a nearly 2.5% decline of the dollar against a basket of major currencies, as speculators unwind their long positions.
The euro is currently trading at $1.07 and is expected to fall to $1.03 in three months, with a median forecast of $1.04 in six months.
Geopolitical uncertainty and tariffs could support a stronger dollar, but the overall large degree of uncertainty is likely to prevent significant changes in dollar positioning.
Market expectations have shifted to pricing in three Federal Reserve rate reductions by the end of the year, contributing to the dollar's recent decline.
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