Investors still skeptical about US dolLar strength amid geopolitical tensions
Investing.com -- A new global survey by Bank of America (BofA) suggests investors remain skeptical about the durability of recent US dollar strength, viewing it as a short-term reaction to geopolitical tensions rather than a lasting trend.
The survey, conducted between April 3–9 among 30 global fund managers overseeing $341 billion in assets, found that while investors rushed to cover short positions in the US dollar following the outbreak of the Iran conflict, they have stopped short of turning outright bullish on the currency.
Despite temporary support from geopolitical risks, most respondents expect the dollar to weaken over time. Growth concerns are outweighing inflation fears, and investors widely believe the US Federal Reserve is more likely to adopt a dovish stance going forward.
Additionally, more than half of respondents identified risks such as loose monetary policy and threats to central bank independence as potential triggers for further dollar weakness.
The survey highlighted a growing consensus that interest rates have peaked. A majority of investors do not expect central banks to deliver more rate hikes than currently priced in by markets.
Instead, “long rates” (bets on falling yields) have emerged as the highest-conviction trade for 2026, particularly at the short end of yield curves. This reflects expectations of slower economic growth and potential monetary easing ahead.
The Iran conflict remains a key factor shaping investor behavior. While many respondents expect the war to end as early as April, fewer than one-third anticipate a full return to normal shipping flows through the Strait of Hormuz by mid-year.
Meanwhile, expectations for a resolution to the Russia-Ukraine war remain subdued, with most investors seeing no near-term end in sight.
BofA also said that it expects oil prices are expected to stabilize in the $90–$99 per barrel range over the next three to six months, according to the survey. In contrast, sentiment on gold is more bullish, with most respondents forecasting prices to return to the $5,000–$5,500 range.
Meanwhile, expectations for a resolution to the Russia-Ukraine war remain subdued, with most investors seeing no near-term end in sight.
BofA also said that it expects oil prices are expected to stabilize in the $90–$99 per barrel range over the next three to six months, according to the survey. In contrast, sentiment on gold is more bullish, with most respondents forecasting prices to return to the $5,000–$5,500 range.