Traders have turned the most bullish on the US dollar in more than a year as the war in the Middle East reinforces demand for the currency as a haven.

Hedge funds, asset managers, and other speculators held $27.8 billion in bets that the dollar will strengthen as of June 9, according to Commodity Futures Trading Commission data compiled by Bloomberg. That marks the largest bullish position since February 2025.

The shift signals a sharp rebuild in confidence around the world’s primary reserve currency after months of volatility in foreign exchange markets.

The dollar has strengthened since the war broke out in late February, showing sensitivity to the surge in oil prices and the inflation pressure that followed.

Higher oil prices can support the dollar through two channels. They push investors toward haven assets during periods of geopolitical stress, and they can also make it harder for the Federal Reserve to cut rates if energy costs keep inflation elevated.

That has made the dollar a cleaner macro trade for funds betting that US rates may stay higher for longer than markets expected earlier this year.

The move also comes as investors watch whether the conflict can be contained. Reuters reported Friday that the dollar was steady as markets monitored Middle East peace talks, while stocks rallied and oil prices fell on hopes for a ceasefire.

That leaves dollar bulls exposed to a fast shift in the narrative. A durable de escalation could weaken haven demand and unwind part of the trade. A renewed oil shock could strengthen the case for more dollar gains.

For now, positioning shows that traders are treating the dollar as one of the clearest winners from geopolitical stress, sticky inflation, and uncertainty around the Fed’s next move.