The US Dollar Index (DXY) has corrected nearly 40% of the 2021-2022 rally in a few weeks. In the view of Kit Juckes, Chief Global FX Strategist at Société Générale, DXY looks set for a jagged peak before falling under 100.

DXY looks set to head into a 90-100 range

“The foundations of the turnround are a growing belief that soft landing are more likely for most economies, than hard ones, that geopoliticaltail risks are getting smaller, and inflation is, in most cases, in the process of peaking.”

“I continue to think the danger of a US hard landing is growing, but it’s also being pushed further in the future than forecasts suggest. The European hard landing has looked less likely ever since energy support packages were announced. But the medium-term dollar effect is the same – DXY looks set to head into a 90-100 range, where it was in 2018/19. But can it do so without multiple corrections? A series of peaks like those in 2000-2002, seem more likely than an imitation of the Matterhorn.”