After advancing by nearly 10% on a year-to-date basis, the US Dollar Index(DXY) has turned and from the intra-day high on 13 May (105.00), the DXY has declined by 3.0%. In the view of economists at MUFG Bank, a turning point in the dollar is looming.

Fed will be in a position later this year to ease off on the tightening cycle

“While we are not confident the US dollar has reached a turning point, the price action in May we believe does suggest a turning point is approaching and that the scope for sustained US dollar strength is limited.”

“The Fed will be in a position later this year to ease off on the tightening cycle which will help turn the US dollar weaker on a more sustained basis.”