# Crowd of dollar bulls raises risk of violent pullback

> Higher US interest rates, a relatively strong American economy and safe-haven demand have driven the dollar up about 22% against a basket of currencies over the past year. Analysts warn that this crowded long position raises the risk of a sharp reversal.

- Date: 2022-09-26 · published 2022-09-26T12:00:00.000Z
- Category: macro · region Global · magnitude medium
- Page: https://feedsoft.ai/events/10321-crowd-of-dollar-bulls-raises-risk-of-violent-pullback
- Commodities: [Mexican Peso (MXN per USD)](https://feedsoft.ai/c/USDMXN.md), [Colombian Peso (COP per USD)](https://feedsoft.ai/c/USDCOP.md), [US Dollar (Broad)](https://feedsoft.ai/c/DXY.md), [Brazilian Real (BRL per USD)](https://feedsoft.ai/c/USDBRL.md), [Euro (USD per EUR)](https://feedsoft.ai/c/EURUSD.md)

## Why it matters

A crowded dollar position that unwinds could lift foreign-currency demand for US commodities and ease pressure on dollar-denominated feed prices. Until then, continued dollar strength keeps US export prices less competitive.

## Read by commodity

- DXY: bullish ▲
- EURUSD: bearish ▼
- USDBRL: bullish ▲
- USDCOP: bullish ▲
- USDMXN: bullish ▲

## Linked price moves

| Commodity | Date | Window | Change % | z-score | Why linked |
| --- | --- | --- | --- | --- | --- |
| DXY | 2022-09-27 | 5 | +2.6% | 3.4 | Higher US rates, relative US economic strength and safe-haven demand drove dollar gains, though the crowded positioning is more a risk note than a direct driver. |

## Similar past events

| Commodity | Date | Event | 5-day % | 20-day % |
| --- | --- | --- | --- | --- |
| DXY | 2016-11-16 | [Dollar index rises to 14-year high, pullback expected](https://feedsoft.ai/events/8332-dollar-index-rises-to-14-year-high-pullback-expected.md) | +0.6% | -0.0% |
| DXY | 2023-03-15 | [Pound falls vs dollar, rises vs euro on bank woes](https://feedsoft.ai/events/10080-pound-falls-vs-dollar-rises-vs-euro-on-bank-woes.md) | -0.1% | -1.2% |
| DXY | 2019-05-01 | [Dollar rises as Fed's Powell cools bets on rate-cut](https://feedsoft.ai/events/59251-dollar-rises-as-fed-s-powell-cools-bets-on-rate-cut.md) | +0.2% | +1.1% |
| DXY | 2023-08-24 | [Dollar rises ahead of Jackson Hole gathering](https://feedsoft.ai/events/34784-dollar-rises-ahead-of-jackson-hole-gathering.md) | -0.2% | +1.3% |
| DXY | 2016-11-25 | [Dollar pulls back after skittling  world currencies](https://feedsoft.ai/events/74038-dollar-pulls-back-after-skittling-world-currencies.md) | -0.3% | +0.7% |
| USDBRL | 2018-06-28 | [How a Rising U.S. Dollar Puts Argentina's and Brazil's Economies at Risk](https://feedsoft.ai/events/64805-how-a-rising-u-s-dollar-puts-argentina-s-and-brazil-s-economies-at-risk.md) | +1.8% | -3.2% |
| USDBRL | 2016-11-16 | [Dollar bulls have room to run on Trump win, euro could reach parity with dollar](https://feedsoft.ai/events/9133-dollar-bulls-have-room-to-run-on-trump-win-euro-could-reach-parity-with-dollar.md) | -2.6% | -3.3% |
| USDBRL | 2018-08-15 | [Dollar Rises Against Emerging-Market Currencies  - WSJ](https://feedsoft.ai/events/12515-dollar-rises-against-emerging-market-currencies-wsj.md) | +2.8% | +6.5% |

## Sources

- financialpost.com: https://financialpost.com/pmn/business-pmn/buoyant-dollar-weighs-on-latam-fx-stocks-sink
- reuters.com: https://www.reuters.com/markets/currencies/crowd-dollar-bulls-raises-risk-violent-pullback-2022-09-26/

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Data from Feedsoft AI (https://feedsoft.ai/). For information only; not investment advice.