Dollar Rally Raises Questions About Who Keeps Buying

The US dollar has been steadily climbing against several major currencies, including the yen, euro, and New Zealand dollar. Alex Ridgers, Global Head of Retail Dealing Desk at StoneX, notes that this rally is unusual in its consistency, moving in a near straight line without sudden spikes or panic buying.

Ridgers attributes the dollar's strength to strong US economic data, a hawkish Federal Reserve, and an ongoing AI trade that supports company earnings. However, he points out that the move has not exhausted any single burst of buying, leaving traders waiting for a sharp reversal.

Despite this, retail traders are betting against the dollar due to its stretched momentum. They see the euro and New Zealand dollar as particularly ripe for a bounce back, but remain firmly long on US stock indices, led by the S&P 500.