Although the US dollar is expected to record its best weekly gain since February this year, this is due to the Federal Reserve's different interest rate policies from its global counterparts, that is, maintaining relatively high rates for a longer period of time, but foreign exchange traders are betting that the US's yield advantage will not continue. On Friday, the US Commodity Futures Trading Commission (CFTC) will release the latest weekly data as of Tuesday, June 11, which will reveal whether speculators continue to maintain this sentiment before the Federal Reserve policy meeting and key consumer inflation data are announced. Before the beginning of June, speculators significantly reduced their long bets on the US dollar for six consecutive weeks.

Federal Reserve officials hinted on Wednesday local time that interest rates will only be cut once this year. Federal Reserve Chairman Powell said that the central bank needs to see continuous evidence that inflation is approaching the target of 2% before it begins to relax its policy. Prior to the announcement of the latest interest rate decision by the Federal Reserve, the Consumer Price Index (CPI) released earlier on Wednesday was lower than expected, causing traders to increase their bets on the Federal Reserve's earliest rate cut in September.

Even after the market turmoil, the US dollar has continued to rise for the fourth consecutive week, which is the longest week since February, only slightly lower than the high point so far this year. The two main counterparts of the Federal Reserve, the European Central Bank and the Bank of Canada, have recently taken their first interest rate cut actions, providing further support.

Analysts at JPMorgan Asset Management wrote in their 2024 mid-term investment outlook that the US dollar will continue to benefit from the Federal Reserve's postponement of interest rate cuts compared to other central banks, but it "may have peaked". They wrote: "Our optimism about the US economy may have reached its peak, and pessimism about other parts of the world may have also reached its peak. Stable interest rate differentials and narrowing growth differentials may limit the US dollar, keeping it strong for a longer period of time, but not stronger."

Non-commercial traders, including asset management companies, hedge funds, and other speculative market participants, have cut more than two-thirds of their long positions in the US dollar since the short-term peak of bullish sentiment in April. They currently hold about $10.6 billion in bets related to the US dollar's strength, the lowest level since mid-March.

Shaun Osborne, chief foreign exchange strategist at Scotiabank, said: "The yield advantage of the US dollar has peaked, which should suppress bullish sentiment on the US dollar. But the market needs to have confidence that the Federal Reserve is easing monetary policy."