The US Dollar Index jumped 0.5% to to 109.67, and had earlier hit 109.91 — its highest level since November 2022.
“Start selling the dollar if our DXY 110 target is breached. Slowing global growth and a relatively more hawkish Fed have been priced in. So is a Donald Trump presidency,” Chester Ntonifor, Foreign Exchange/Global Fixed Income Strategist at BCA Research, said in a note.
The firm argues that this level would have fully priced in the “Trump-trade” and would be initiated from significantly overvalued levels.
The call for a weaker dollar comes as the strategist believes that “the bout of strength in US inflation, especially relative to other markets, is in its last innings,” amid expectations for a U.S. slowdown.
While the latest jobs report for December signaled little sign of a slowdown, Ntonifor sees the risk of the U.S. economy slowing due to “tightening financial conditions in the US.”
Looking ahead, Ntonifor suggested that a potential scenario could unfold later this year where “equity markets correct, the US dollar declines, and bond yields fall.”
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