Following the recent U.S. presidential election, the U.S. Dollar Index (DXY) has regained upward momentum, reaching a new yearly high of 106.87 (closing price). Notably, this year’s DXY performance closely parallels its trajectory during the 2016 election, when Donald Trump also emerged victorious.
The accompanying chart compares DXY movements from approximately three months before the 2016 and 2024 elections to the following months. The two patterns exhibit a strikingly high correlation, with a coefficient exceeding 0.9. This strong relationship provides valuable insights into the potential trajectory of the DXY.
In 2016, the DXY began its ascent three months before the election, continuing to rise post-election. However, about six weeks later, just before the inauguration, it peaked and entered a prolonged downtrend that lasted approximately 18 months.
If this historical pattern repeats, the DXY could peak near the end of this year, potentially reaching 108, before reversing its course in early 2025.
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