Measures of the trade-weighted US Dollar Index are around 2.5% off their highs of the year. Corrective forces may dominate short-term but the core bull trend should remain intact, economists at ING report.

Corrective forces build

“A reversal in UK fiscal policies, some stability in equity markets, and a dip in European energy prices point to a further corrective period in FX markets.”

“A quiet week for US data could see the dollar correction extend a little. And the case could be made for DXY heading back to 110 (another 2% drop). But a core view of not just the Fed, but other central banks hiking into a looming recession should mean that the core dollar bull trend remains intact.”