(Bloomberg) -- The US dollar’s winning streak looks to be running out of steam.

Strategists at Barclays Plc, Morgan Stanley and National Australia Bank Ltd. caution that bets on the greenback are getting increasingly stretched. Options positioning shows the weakest appetite for new dollar positions in two months. And gauges of volatility show expected moves in currencies at the lowest in 18 months.

A Bloomberg index of the dollar has traded sideways since hitting its year-to-date peak earlier this month, and even US Treasury yields spiking to their highest in more than a decade last week failed to ignite enough momentum for the currency to push higher. 

“Here comes the big dollar let-down,” said Themistoklis Fiotakis, head of FX research at Barclays Plc in London. “At this point, big dollar theories can bite.” 

It’s not the first time that Wall Street has called the demise of the dollar, only for the currency to rip higher. A slide in July that some saw as marking the end of the greenback’s gains quickly transformed into a roaring rally. More recently, appetite for safe havens from the geopolitical turmoil in the Middle East has fueled sporadic demand for the dollar. The currency also climbed Tuesday despite the Bank of Japan’s decision to ease curbs on domestic bond yields.

Read more: Fed, Geopolitics Threaten Dollar’s Seasonal Year-End Slump

Still, a recent MLIV Pulse survey suggests enthusiasm for the dollar may have peaked in September, with other analysts joining Fiotakis in seeing dollar bets as now too crowded. Combined long positions on the ICE dollar index by leveraged funds — the most speculative type among investors — rose to almost 4,600 contracts on the week ending Oct. 10, the highest since July, CFTC data show.

“The fact that the dollar hasn’t managed to push higher against a backdrop of usually positive drivers suggests the strong rally from mid-July to early October has run its course,” said Rodrigo Catril, currency strategist at National Australia Bank in Sydney. “Long positioning in the dollar provides a suitable headwind to any further strength.” 

Signals from the options markets are also sobering. 

One-month risk reversals — a short-term measure of bullish sentiment and positioning — is approaching a three-month low, a sign that dollar buyers are not willing to chase a strengthening greenback at current levels. And JPMorgan Chase & Co.’s gauge of three-month implied currency volatility has fallen to the lowest since February 2022. That suggests investors are not expecting any dramatic dollar moves in coming months. 

For some investors, the greenback is still the only game in town despite its problems. With the domestic economy remaining buoyant even as growth slows in Europe and China, US exceptionalism and higher yields appeal, according to Johanna Kyrklund, chief investment officer at Schroder Investment Management Ltd in London.

“We really lack a credible alternative,” she said on the sidelines of an event earlier this month. Like the quip, “the rumors of my death are grossly exaggerated, I feel it’s the same with the dollar.” 

Yet broad enthusiasm for the currency seems to have stalled, according to an MLIV Pulse survey published this week. In September, 60% of respondents expected further gains for Bloomberg’s gauge of the greenback; this month, that figure had slipped a percentage point.

History is also not on the dollar’s side. Over the past decade, there were only two periods when the Bloomberg Dollar Spot Index stayed above the 1,280 level for more than a few days. The first instance was in March 2020, at the beginning of the global pandemic when haven demand was at a high, while the other was in the second half of last year when the euro traded at parity with the dollar. 

Morgan Stanley strategists James Lord and David Adams started advising clients to pull back their long dollar positions last week. The greenback has already priced in many positive catalysts, including elevated yields and a better US economy relative to rest of the world, the strategists said.

For Gareth Berry, a strategist at Macquarie Group Ltd. in Singapore, the dollar could still have a “last gasp” as investors seek havens. But the prospect of interest rates in the US peaking and ultimately declining mean “the passage of time will not be on the dollar’s side.”

--With assistance from Anya Andrianova and Ruth Carson.

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