Speculators in euro and Swiss franc futures dramatically scaled back their positions in these two currencies in the week ended July 27, data from the Commodity Futures Trading Commission showed on Friday.
Speculative investors are now modestly net short of Swiss francs, having held a huge net long position the prior week.
The data from the CFTC's Commitments of Traders report on speculative positioning are used by analysts as an indicator of future market direction.
For example, extreme net long speculative positions often signal a decline in the currency going forward, especially if that position conflicts with the positioning of the more influential commercial players.
Speculators generally are trend followers seeking to pick a precise top or bottom in the market.
Futures speculators cut the net long euro position to 16,927 contracts from 36,101 contracts in the prior period.
Speculators turned around their net Swiss francs position to a net short 826 contracts from a huge net long of 21,163 contracts the week before.
"That's the big one," said T.J. Marta, currency strategist at Citibank in New York, noting that the value of the net short position is now around $81 million compared with around $2.1 billion net long position. Together with the big cut in net long euro positions, this removes some of the dollar's upside potential from a positioning perspective. "I'd say it calls into question further dollar appreciation," Marta said.
Sean Callow, currency strategist with IDEAglobal in New York, reckons the move shows that dealers are more hesitant to bet on the euro.
In the week to July 27, the euro fell to around $1.2050 from around $1.2450.
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