Listen to the latest market mood for the DXY:

Most analysts are expecting a strong run lower in the USD for 2021. The key drivers are the reflation narrative regarding global growth, large QE purchases from the Federal Reserve, low interest rates expected until 2023, and an upcoming Biden Presidency which walks back some of the US protectionist policies from under President Trump. In this environment, it is reasonable to expect further USD downside.

The most prudent approach looks to be selling DXY rallies.

Trade Risks:

  • The main risk to this trade is if there is a return to risk-off trading which would strengthen the USD.
  • Any indication that the Federal Reserve will be raising interest rates sooner than 2023 will strength the USD and invalidate this outlook.