Investors bet on short-lived boost for dollar from Iran war, BofA survey shows

LONDON, April 13 (Reuters) - Around a fifth of investors say a bearish dollar position is their highest conviction trade in 2026, anticipating the tailwind from the Iran war will be temporary and the Federal Reserve likely to favour looser monetary policy, a BofA survey on Monday showed.

The April FX and rates sentiment survey polled 30 global fund managers, with a collective $341 billion under management between April 3-9.

The dollar index has rallied just over 1% against other major currencies since the war broke out in late February .

Here are the key highlights of the BofA report:

* 21% of those survey said "short dollar" was their highest conviction trade, the most since last September. "Long rates" took the top spot, with 28% saying this was their preferred trade. A short position suggests investors believe an asset will fall in value, while a long one assumes the opposite.

* "Investors covered dollar shorts but do not want to go long: support from Iran war temporary and Fed seen as likely to err dovish. Respondents do not believe in rate hikes: long conviction increased but expressed at front end of curves," the survey said.

* "Long risk" is still considered the most crowded trade, according to 29% of respondents, slightly ahead of "long rates", with 21% of respondents.

* Positioning in emerging market currencies "now looks very clean", according to the bank, which said these assets could benefit from geopolitical optimism. (Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)