Finance
Dollar options traders turn bearish as 'bye America' selloff deepens
Published by Global Banking and Finance Review
Posted on January 28, 2026
2 min readLast updated: January 28, 2026
Quick Summary
Options traders are bearish on the dollar amid a market selloff, impacting Euro, Sterling, and Yen. Global sentiment shows reduced exposure to U.S. assets.
Dollar Options Traders Shift to Bearish Sentiment Amid Selloff
Market Sentiment and Currency Trends
LONDON, Jan 28 (Reuters) - Options traders have turned overwhelmingly negative towards the dollar this week, after President Donald Trump brushed off the U.S. currency's 2.5% slide this month, pushing the cost of derivatives to buy other currencies to the highest in months on Wednesday.
Impact on Euro and Sterling
Three-month risk reversals for the euro, which reflect the difference in the price of options to buy the currency and the price of those to sell it, shot to 1.38 percentage points, their highest since last April's five-year peaks and up from around 0.28 a week ago.
Japanese Yen Performance
The euro itself hit $1.20 for the first time since mid-2021 on Wednesday
Global Investor Sentiment
Sterling three-month risk reversals reached -0.04, still showing some bullishness towards the dollar, but this was the highest since last May. They were at -0.475 at the start of January.
The pound, meanwhile, has also risen to its strongest against the dollar since July last year.
"Participants in the rest of the world continue to trim exposure to U.S. assets, in reflection not only of the increased policy volatility that continues to emanate on the trade front from Washington DC, but also amid speculation that the Trump administration might be pursuing what one could reasonably call a ‘less strong dollar’ policy," Pepperstone senior research strategist Michael Brown said in a note.
He added that the "bye America" trade has been a dominant theme for currencies.
Trump said on Tuesday the value of the dollar was "great", when asked whether he thought it had declined too much.
The Japanese yen is set for its strongest monthly performance against the dollar since last April, as speculation of joint Japanese-U.S. official intervention to support the Japanese currency persists.
Three-month risk reversals have hit -2.0, down from -0.575 at the beginning of the year. Unlike risk reversals for the euro and sterling, a more negative risk reversal for the yen reflects more bullishness towards the currency and more negativity towards the dollar.
(Reporting by Amanda Cooper; Editing by Louise Heavens)
Key Takeaways
- •Options traders are bearish on the dollar.
- •Euro risk reversals hit highest since last April.
- •Sterling shows some bullishness towards the dollar.
- •Japanese yen sees strongest performance since last April.
- •Global sentiment reflects reduced exposure to U.S. assets.
Frequently Asked Questions about Dollar options traders turn bearish as 'bye America' selloff deepens
1What is a currency risk reversal?
A currency risk reversal is a financial derivative that measures the difference in the price of options to buy a currency versus the price to sell it, indicating market sentiment.
2What is the impact of a strong dollar?
A strong dollar can make U.S. exports more expensive for foreign buyers, potentially reducing demand for American goods and affecting trade balances.
3What is a bearish market sentiment?
Bearish market sentiment refers to a prevailing attitude among investors that prices will decline, leading to pessimism about the market's future performance.
