The U.S. Dollar Index (DXY) was trading around 96.9 in early U.S. hours Friday, up 0.1% on the day but still tracking a roughly 0.6% weekly decline. Analysts at Bank of America (BofA) Securities noted that underweight exposure to the dollar has fallen below levels seen in April 2025, marking the weakest positioning since their dataset began in 2012.
While concerns over Federal Reserve independence have eased following Kevin Warsh’s nomination as Fed chair, BofA said that shift has not translated into renewed demand for U.S. assets or the dollar. Investors are reportedly increasing FX hedge ratios, trimming U.S. exposure, and anticipating further reserve diversification away from the dollar.
FAQ Why is the U.S. dollar falling?Investors hold record underweight positions and expect further diversification away from USD. Does a weaker dollar help bitcoin?Historically yes, but recent data shows a positive correlation. What is the current BTC–DXY correlation?About 0.60 on a 90-day basis. Could a short squeeze impact bitcoin?Yes, a sharp dollar rebound could lift BTC alongside it.
