Since February 28, the United States and Israel jointly attacked Iran, the dollar by virtue of its safe-haven attributes, as well as the United States as the world's largest energy producer of the currency advantage continued to strengthen. Bloomberg Dollar Spot Index rose 2% cumulatively during this period, and touched its highest level since December 2025 on Monday; highly dependent on Middle East energy imports of the euro and the yen during the same period, all of which fell against the dollar by more than 2%. However, we clearly determine that the dollar rose to the current level, the greater probability of a typical \"long trap\" - that is, the price trend to lure investors to follow the trend of entry, will usher in a rapid reversal of the false action. The current market has fully priced the inflation risk posed by rising energy prices, but seriously underestimated the geopolitical conflict and energy shocks to the negative drag on global economic growth, this pricing bias, is to drive the dollar trend reversal of the core logic.<\/p>\n
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From the perspective of the position structure, the latest CFTC data show that as of the week of March 17, traders for the first time this year collectively turned bullish on the U.S. dollar, crowded long positions have been for the subsequent reversal of the market to lay the groundwork. The decision of the exchange rate in the medium and long term trend of the core spread level, we make a clear differentiated projection of the policy path of the European and American central banks: the face of energy shocks brought about by the dilemma of inflation and growth, the Federal Reserve probability of ignoring the current round of temporary inflationary shocks, the focus of the policy will be anchored in the downside risks to economic growth, we expect that this year, the Fed will land on the two interest rate cuts; and the European Central Bank will be compelled by imported inflation The rigidity of the pressure, in order to deal with the upward risk of inflation cumulative rate hikes of 50 basis points. This policy differentiation will directly promote the U.S. and European interest rate differentials continue to narrow, both in absolute terms or relative to the current market pricing, this interest rate trend will be a clear negative for the dollar. It is worth noting that this judgment is also cross-corroborated with the latest findings of Castle Securities, the main line of pricing in the global market, from the initial impact of inflation, and gradually shifted to its impact on the deep inhibition of global economic growth.<\/p>\n
<\/a>US bond sell-off centers on short-end forced unwinding, liquidity deterioration amplifies market volatility<\/strong><\/p>\n This month's sell-off in the U.S. Treasury market also featured an underlying trading logic that the market generally failed to capture. We found through the dismantling of the full-term U.S. bond trading data, the current round of U.S. bond sell-off, the core of the two-year short-end Treasuries were forced to close their positions typical characteristics, which is also the short-end yields appear to be the core of the expected spike in the pushers. After the outbreak of the Middle East conflict, soaring oil prices completely reversed the market's bets on the Fed's rate cuts, and even began to price in rate hike expectations, two-year U.S. bond yields in this period accumulated about 50 basis points to 3.87%. But our analysis shows that this round of upward movement in yields is not entirely dominated by the change in policy expectations, the closure of positions and deterioration in market liquidity, significantly amplifying the magnitude of the sell-off with speed.<\/p>\n At the data level, we clearly observe a marked decline in liquidity in the U.S. Treasury market during the current round, particularly at the short end of the spectrum: for the most recent two-year U.S. bond issuance, bid-ask spreads have widened by about 27% year-to-date in March compared to February, a figure based on an average intraday spread measure of $50,000 per basis point of volume, which intuitively reflects a significant rise in the cost of trading short-end U.S. bonds. Counterintuitively, volume, which would normally be dampened by wide spreads, hit its highest level since April 2025 during this period. This price-volume divergence confirms that a large number of trades in the market are not motivated by active allocation willingness, but rather forced to close positions and stop losses, which is the core basis for our judgment that the current round of selling carries the characteristics of a strong closeout.<\/p>\n In contrast, the performance of 10-year and other long-end U.S. bonds is relatively stable, and further illustrates that the current round of the market is not a reconstruction of the logic of long-term pricing of U.S. bonds, but rather the short-end liquidity deterioration and congestion of trading closeout brought about by the stage of the impact. For the current market, penetrate the surface price fluctuations, see the underlying trading logic and policy pricing deviations, is to grasp the core of the subsequent trend. Based on the above judgment of the market's core contradictions, we combined with the short- to medium-term market main switching tempo, formulated a targeted executable investment strategy, in order to avoid the uncertainty risk at the same time, the early layout of the core opportunities of the trending market.<\/p>\n![\"Local](\"https:\/\/www.kpai1.cn\/wp-content\/uploads\/2026\/03\/20260326_152641.png\")
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