This is an update of our article published at Seeking Alpha on June 18, 2018, “U.S. Dollar: Forget Monetary Policy Divergence; Firming U.S. Capital Account Supports DXY Until 2019.“
We said then:
The sharp improvement in US capital account since Q3 2016 therefore results in further rise of the US dollar until late June this year, then a decline until July-August followed by a rising US currency until the first half of 2019.
That forecast happened in a general way, with the US dollar bull phase extending up to late March, this year, when global risk asset markets started to recover from its COVID-19 fright and the US currency lost its cachet as safe haven destination of global capital.
Since then, the US Dollar Trade Weighted Index has been weak against a bevy of Developed Market (DM) currencies. It has been weakest against the euro during that time,