The US Dollar Index (DXY) has retraced 40% of the up-move since spring 2021, and economists at Société Générale expect more.

Time to sell the Dollar

“We expect the Dollar to be the weakest of the G10 currencies in 2023, though it won’t fall in a straight line.”

“The Fed is closer to the end of its rate-hiking cycle than most. If taming inflation triggers a harder economic landing than expected, that will happen later rather than sooner. For now, a soft landing isn’t good for the Dollar.”

“A backdrop of soft economic landings, monetary policy pivots and a correction in energy prices (which have been very dollar-supportive) suggests the Dollar Index will reverse most if not all the gains it saw between January and September 2022, taking it back below 100.”