Key Moments
- Bank of America reports that speculative positioning is slightly short the U.S. dollar as 2025 approaches its end.
- EUR/USD demand dominated 2025 positioning flows, with the euro moving from a very short starting point to a long stance that has since been scaled back.
- The bank signals near-term caution on AUD and JPY, while viewing potential euro strength as more of a 2026 story.
Dollar Positioning Turns Modestly Negative
Investing.com – Investors are ending 2025 with a small net short exposure to the U.S. dollar, according to a Bank of America report published on Monday. The bank observes that, although the dollar was broadly sold over the course of the year, much of the aggressive short positioning has been pared back in recent months.
Bank of America explains that most of the U.S. dollar short positions were unwound during the fourth quarter. As a result, the market is now only slightly short the greenback rather than heavily positioned against it.
Euro Leads 2025 Currency Positioning Dynamics
The report identifies EUR/USD as the dominant positioning theme of 2025. Demand for the euro was particularly strong in the first half of the year, when the currency began from what the bank describes as a very short starting point.
Over time, this led to a build-up of long euro positions against the dollar. However, Bank of America notes that those long EUR exposures have since been trimmed and now stand below their earlier 2025 peaks, even though they remain in positive territory.
Mixed Impact on Other Major Currencies
Despite widespread dollar selling during the year, Bank of America points out that the British pound and Australian dollar did not fully capitalize on the move. The report states that these currencies saw only limited benefits from the broader shift away from the dollar.
The bank highlights contrasting positioning across the G10 complex:
| Currency | Positioning vs USD | Additional Notes from Report |
|---|---|---|
| EUR | Long | Still long but reduced from earlier 2025 levels |
| AUD | Long | Long exposure has decreased compared to earlier in 2025 |
| JPY | Slight long | Bank signals near-term caution |
| NZD | Short | Remains in short territory; was net bought over the year |
| CAD | Short | Remains short; was nevertheless net bought during the year |
| CHF | Not specified | Identified as net bought during the year |
According to the analysis, the Japanese yen is currently held in a slight net long position. In contrast, the New Zealand dollar and Canadian dollar still sit in net short territory. Even so, Bank of America notes that the Canadian, Swiss, and New Zealand currencies were net bought over the course of 2025.
Bank of America’s Tactical Views
Drawing on these positioning patterns, Bank of America adopts a cautious short-term stance on the Australian dollar and Japanese yen. The bank indicates that existing long positions and the recent evolution of flows argue for restraint on both currencies in the near term.
On the euro, the report suggests that additional, more durable strength is unlikely to emerge immediately. Instead, Bank of America frames the prospect of more pronounced euro appreciation as a scenario that is more likely associated with 2026 developments than with the closing stages of 2025.
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