Speculators in International Monetary Market currency futures on the Chicago futures exchanges extended their net long dollar positions in the week to September 27, data released on Friday showed.
This growing bullishness on the dollar was reflected in the currency's rise to two-month peaks against the euro, yen and sterling during the week in question.
The main currency bucking this trend, however, was the Canadian dollar, which pushed to 14-year highs during that week. IMM traders' net long Canadian dollar positions in that period were the biggest in almost a year.
Overall, IMM traders extended their net long US dollar position against six major currencies - the euro, yen, sterling, Swiss franc, Canadian and Australian dollars - to 35,796 contracts from 6,685 contracts a week earlier.
Being "long" a currency is effectively a bet it will strengthen while being "short" is effectively a bet it will weaken.
Dealers often look to market positioning data for clues to how currencies might trade in the near future. For example, extreme net short speculative positions often suggest a rebound in the currency is imminent because dealers might be uneasy about keeping such a large position open.
Similarly, extreme net long positions can suggest a currency has already appreciated a great deal and is poised for a correction because dealers are ready to lock in profits.
The net long dollar position isn't extreme by historical standards but may be large enough to limit further upside in the near term, analysts said. The euro's ability to hold up above $1.20 support, for example, is a sign that the dollar's impressive run lately may be running out of steam, for a while at least.
IMM traders barely adjusted their euro positions, which stood at 1,603 net short contracts, while they cut their net long sterling positions further to an equally neutral 2,563 contracts.
The biggest shifts from the previous week were seen in the yen, Swiss franc and Canadian dollar.
Net short yen contracts were increased to 59,066 contracts, and net short Swiss franc contracts were increased to 43,731 contracts, the biggest net short position in almost 3 months.
Canadian dollar net longs, meanwhile, were increased to 43,096 contracts, the biggest since October 12 last year.