Dollar goes from strength to strength

The US dollar has rallied further this week as investors have continued to price in the implications of a second Trump term and digest weak economic data in key trading partners. This rally has taken the DXY Index to its highest level since November 2022 and marks an eighth successive week of gains, for only the third time this century.

History suggests that a period of consolidation is likely after such runs – that was the case on the two previous occasions such runs were chalked up. And we suspect that is likely to happen again – we forecast the DXY Index to remain around its current level for the rest of 2024. But we think it will ultimately break higher, reaching 111 by end-2025.