Having corrected 3% lower, some are asking whether the dollar has peaked. Economists at ING argue that the dollar is more likely to retest its highs than correct much lower.

Curb your peak dollar enthusiasm

“Many trading partners would hope that to be the case, but the reality is that the Fed is likely to stay on track with its tightening. We think the dollar is more likely to retest its highs than correct much lower.”

“Driving our view has been consistent rhetoric from the Fed that it will not be blown off target by some softer activity or price data.” 

“It now looks like US activity is accelerating again as lower gasoline prices leave more dollars in the pockets of US consumers. The 2023 US recession narrative looks a tough one to sell near term.”

See: USD strength to persist as Fed’s dovish pivot still sits further in the future – HSBC