Why do FX strategists expect the US dollar to remain range-bound in the near term despite escalating tensions in the Strait of Hormuz?

FX strategists expect the US dollar to remain range-bound in the near term because its movements have largely mirrored swings in investor sentiment around the U.S.-Israel war with Iran—rising on escalation headlines and falling when tensions ease—rather than reflecting a sustained directional shift; as Paul Mackel of HSBC stated, 'It's likely the dollar is stuck in this relatively range-bound period for the next few months' due to alternating moments of de-escalation (dollar softening) and reminders of ongoing geopolitical risk (dollar strength), making sentiment the dominant force rather than structural drivers.

What does the Reuters poll reveal about market positioning in the US dollar and long-term outlook for the euro?

The Reuters poll shows dollar positioning flipped from deeply net-short before the war to comfortably net-long currently, with half of responding strategists expecting little change in positioning by end-May, only two forecasting a reversal to net-shorts, and 12 expecting net-longs to increase; yet the longer-term bearish view persists, as the year-ahead euro median forecast remained unchanged at $1.20 from April, reflecting expectations of continued dollar valuation decline driven by investor diversification into European currencies like the euro and sterling.

Reuters Poll: US Dollar Range-Bound Amid Strait of Hormuz Tensions

May 6, 2026

Reuters poll shows FX strategists expect the US dollar to stay range-bound due to Middle East tensions and elevated oil prices, citing a 40% rise in Brent crude amid Strait of Hormuz disruption fears.

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