Analysts led by Adarsh ​​Sinha noted that quantitative models show investors increasingly bracing for "a protracted war and higher energy prices," with market positioning shifting decisively toward the dollar.

BofA wrote that "the US dollar should be the main beneficiary," noting that bullish signals have been "activated relative to all other perceived safe havens."

Options data shows "strong demand for US dollar calls relative to all other perceived safe havens," reinforcing what the bank describes as a broad overvaluation in the currency market.

The bank stated that risks associated with war in the Middle East are sharply increasing.

"As the Middle East war enters its third week, the risks of a more protracted conflict and persistently high energy prices have increased significantly," the analysts wrote, adding that markets had been "slowly pricing in such a scenario," but the revaluation "is well underway and should support further US dollar strength."

BofA's technical models now point to bearish continuation signals for the Swedish krona and New Zealand dollar.

The bank stated that the SEK and NZD "tend to sell off on macroeconomic shocks," and its "FX Signal of the Week" recommends bullish positions on USD/SEK and bearish positions on NZD/USD.

Even traditional safe havens are weakening. "The EUR and JPY have also been in sustained downtrends against the US dollar for several weeks, and even the mighty CHF has lost its uptrend," BofA said.

"Until de-escalation becomes evident," the bank concluded, "the US dollar looks set to reign supreme."