$DXY breaking down. Next level to watch 95. Year-end lows @ 90.

Even if the Fed cutting cycle has just started, we are seeing major weakness in the DXY index prior to the easing cycle. It is quiet peculiar the bottom to top of the Fed hiking cycle matches exactly to the DXY index Cycle bottom in 2021 to cycle top to September 2022. With a drop in the Fed fund rate from 5.34% to 4.34%, which is close to 18%, and the DXY has also lost almost 17%. If the expectation is that there will be another 0.25% rate cut over the next few months which will takt the Fed fund rates to 4.09%, which is 23% from the recent highs of 5.34%. And surprisingly if we plot 23% lower from the ATH on the DXY Index then the index should reach 90 by the end of the year.

Verdict: With Fed rate lowering cycle ongoing the DXY index will lose more strength. 95 remains our short-term target and DXY to reach 90 by year end.