Conducted between March 6 and March 11 among 39 global fund managers overseeing $632 billion in assets, the survey shows that geopolitical tensions have dampened market confidence and triggered a significant repositioning in currencies.

Survey participants' responses also indicated a broader decline in confidence, with "Other/Don't Know" being the most common response to the question about the trade with the most confidence this year.

One of the most obvious changes was the performance of emerging market currencies against the dollar, with both sentiment and positions falling to levels last seen in April 2025. Meanwhile, the US dollar has shown a rapid recovery in investor positions, with long USD positions becoming a popular trade for the first time in months as investors reduce their broader risk exposure.

"USD positions have sharply reversed from record lows a month ago to neutral levels, with investors viewing the traditional 'risk-off' scenario as the main upside risk going forward," strategists led by Ralph Preusser wrote in a research note.

The overall backdrop remains uncertain, particularly regarding geopolitical developments and energy prices. Investor opinions are divided on the duration of the Middle East conflict, though most expect disruptions to last between one and three months. Many also forecast oil prices to average $90 per barrel or higher over the next three to six months.

Despite the changes in currency positions, interest rate outlooks have remained more stable. Strategists note that duration exposure has remained little changed following the recent geopolitical escalation, suggesting that investors remain cautious in adjusting rate expectations even as risk sentiment worsens.