Core Viewpoint - Hedge funds globally are increasingly favoring the dollar in the options market, anticipating a continued rebound against major currencies into year-end [1][4]. Group 1: Market Trends - European and Asian funds have significantly increased option trades, betting on the euro and yen weakening against the dollar, with bearish trades on the euro outpacing bullish ones by three times on Wednesday [2][4]. - Hedge funds are adopting a tactical approach to long dollar positions in the short term, particularly with expiries before year-end [3][4]. Group 2: Currency Analysis - The euro is under pressure due to political instability in France, while the yen is declining amid speculation of slower interest-rate hikes from Japan's potential new leadership [5]. - The New Zealand dollar has also weakened following a larger-than-expected rate cut, making the dollar more appealing against these currencies [5]. Group 3: Investment Strategies - Hedge funds are purchasing vanilla dollar call options and call spreads against the euro, sterling, yen, and New Zealand dollar, indicating a bullish outlook on the dollar [6]. - The majority of dollar call buying is concentrated in G-10 currencies, with increased front-end risk reversals signaling a shift in demand [7].