The U.S. Dollar Index (DXY) has historically posted strong gains between May 1 and May 25, with a 66.67% win rate. However, this year’s macro backdrop could disrupt that pattern. Mounting trade tensions and declining confidence in U.S. policy undermine traditional safe-haven flows. According to Deutsche Bank, we may be in the early stages of a “dramatic regime change” that challenges the dollar's status.
The dollar index has a very interesting turn of the year pattern. Heading into year and the dollar sees pronounced weakness from a seasonal perspective but in contrast, we see dollars strength to start the year from a seasonal perspective.
On November 14, US CPI inflation data is coming out and it's widely anticipated to come in lower than the prior reading with the headline at 3.3% and the core in line with the prior reading of 4.1% year-on-year now there is intense focus on US inflation because markets are trying to assess whether the Federal reserve has indeed finished hiking interest rates if they have finished hiking interest rates that could signal another leg higher in US equities as well as the beginning of a down trend for the heavily bought US dollar.
The USD has a period of seasonal weakness around the start of June. Over the last 10 years it has fallen 7 times between May 31 and June 10. The average fall has been -0.93% and the maximum fall has…
