Shorting the dollar has been a standout winner of 2025—the USD was down almost 10%, and it’s slipped another ~1.2% just in December. No surprise everyone’s feeling pretty good about it right now.
But here’s where seasonality throws a curveball.
December has historically been the dollar’s roughest month, averaging about -0.9% (easily the weakest of the year). Then January rolls around… and it’s typically the strongest, with an average gain of +1.0%. That’s usually the start of the dollar’s best run, often holding firm from early January through the first week of April before things taper off.
I’m still convinced the bigger-picture trend points to a weaker dollar over time. That hasn’t changed.
In the short term, though, all that heavy short positioning could hit some turbulence—and that ripples through a lot of portfolios:
Your split between US and international stocks
Emerging vs. developed markets
Commodity bets
Crowded trades have a habit of getting tested exactly when everyone’s most convinced they’re right. Worth keeping an eye on as we turn the page to 2026.
