Shift to U.S. dollar shorts not a sell signal

While the turnaround in positioning from long to short on the dollar shows that sentiment on the U.S. currency has deteriorated sharply, analysts say it should not be interpreted as a sign the greenback is about to collapse.

Fears that the U.S. economy is at risk of a double-dip recession after a string of weaker-than-expected data this month have been weighing on the dollar and helping contribute to a gradual erosion in long dollar positions.

Declines in the greenback accelerated last week and the euro hit a two-month high after the Federal Reserve's minutes of its last meeting showed policymakers were concerned the U.S. recovery may be slowing. Read more