It's always a pain trade

Short-dollar is the second-most crowded trade, according to Bank of America Merrill Lynch's most recent fund manager survey

Markets always find a way to inflict the most pain, on the most amount of people.

If that's the philosophy, it's no surprise that the US dollar has been on a two-week rampage. On Friday, I wrote about the crowded USD net long and mentioned three spots in particular where it was nonsensical -- EUR, NZD and MXN.

"This euro position looks crazy," I wrote, noting that the net long was at a record despite a string of weak data.

All three have been hammered this week.

The bigger risk is that structural trades are dismantled.

"Nearly every consensual macro trade has an implicit short-dollar view built-into it," Nomura Holdings Inc. strategist Charlie McElligott wrote in a note to clients Tuesday. "A dollar squeeze is a major risk to longs including emerging markets, crude oil, the Nasdaq, the euro, the yen and industrial metals."