Dollar is unlikely to fall in a straight line – SocGen

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The DXY Dollar Index has corrected almost 40% of the 2021-2022 rally in just a few weeks. In the opinion of Kit Juckes, chief global currency strategist at Société Générale, DXY looks poised to peak before falling below 100.

DXY looks like it will head for a 90-100 range.

“The fundamentals of the trend reversal are the growing belief that a soft landing is more likely for most economies than a hard onethat tail geopolitical risks are diminishing and that inflation is, in most cases, in the process of reaching a maximum“.

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“I still think the danger of a hard landing in the US is increasing, but it is also moving further into the future than forecasts suggest. A European hard landing seems less likely since energy support packages were announced. But the effect of the dollar in the medium term is the same: the DXY looks like it will head for a 90-100 range, where he was in 2018/19. But will you be able to do it without multiple corrections? A series of spikes like those of 2000-2002 seems more likely than a Matterhorn imitation.”

Source: Fx Street

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