Signs are the next month will bring a third attack on the $1.0450 barrier that halted the dollar's rise against the euro earlier this year and positioning data indicates the bulls will have a stronger hand this time than in March or April. Most players in the interbank foreign exchange market - except Britain's HSBC - have been calling for a move towards dollar parity with the single currency over the coming months, and it finally seems the stars are aligned.
The European Central Bank's promise late last month of yet easier policy to aid growth has seen the biggest weekly move in the euro's 16-year history into "short" investment positions betting against the currency. That, and Friday's US jobs numbers, have generated the biggest monthly shift in the dollar in more than six months, yet the number of euro "shorts" is still just over half what it was at its peak in March and April. So there should be more room in the books of banks and investment funds for pro-dollar bets.
"Overall dollar positioning is still incredibly light," said BNP Paribas strategist Michael Sneyd, who runs a quant index which merges a number of measures to calculate positioning. "That means the dollar rally still has a lot of legs." The dollar was again pressing last week's six-month highs against a basket of currencies on Tuesday. Against the euro it rose half a percent to $1.0697.
"Positioning is not as heavy as you think, on a 1-10 scale, I would put it at about 6," a senior trader at another international bank in London said on Tuesday. "Amongst the real money players, a lot of people have been underweight the short-euro trade. A lot of people have also used downside option structures and those will be realised before we get to $1.05, meaning they can load up again."
Yet the longer-term barriers to that move - a seismic shift in the global economic landscape - have not disappeared. While the US currency's rally arguably just ran out of steam in the spring, it came with some fairly stiff warnings from corporate America and the Federal Reserve about the impact of a strong dollar on growth and profitability.
Longer-term measures of the greenback's "fair" value may be moving, but most suggest it is already well overvalued. The more the dollar moves before any rise in Fed interest rates, the more emerging market borrowers who have borrowed billions of dollars will be squeezed. And if the euro weakens sharply, many argue the European Central Bank may go easier on its own side of the equation.
"iFlow" data from custodial bank BNY Mellon provides another indicator, analysing positioning through the more than $20 trillion in assets under management. It says the data suggests investors are more focused on the idea that any ECB - or euro - easing will make it harder for the Fed to hike rates.