The U.S. dollar was trading higher early Wednesday afternoon for no fundamental reason, but because market participants decided to play the bullish card.

''The flavor of the week is to be long (invested in) dollars, to be bull- ish, to see the dollar push higher and higher," said David Wilson, chief dealer at Giro Zentrale.Other dealers said the market was caught up in a bullish phase that they acknowledge had no fundamental underpinning. There were minor reasons to buy the dollar, but nothing overwhelming, they said.

The dollar rose suddenly Wednesday morning on a report of new fighting in southern Iraq. European markets were closing about then and decided once again to buy dollars.

"Yes, New York is getting very bullish on the dollar," said Steve Flanagan, dealer at Mitsubishi Bank. "The prevailing feeling is we will trade higher. There's been no Federal Reserve easing, and there's this talk of a Russian coup."

The coup rumor was denied by a senior Russian diplomat in London. It began on remarks by Eduard Shevardnadze, the well-connected former Soviet foreign minister under Mikhail Gorbachev. Mr. Shevardnadze said Russian President Boris Yeltsin's grip on power could weaken because of price reforms and shrinking food supplies.

Adding to the credibility was a Johnson-Smick International report which said an underground nationalist movement is gaining strength in Russia. The report supports other published stories that the underground group is winning converts and has sent bold messages that it would be willing to bargain with the United States, Europe and Japan should Mr. Yeltsin be replaced this summer.

"There may be something to it," said a chief dealer Wednesday morning. ''When you're cold and hungry, you turn to anyone and a lot of Russians are disillusioned with democracy. People are impatient for a better life. Here the West is airlifting food, wondering about the ruble, all the while asking the question: Who is controlling what? It's scary," he said.