During Donald Trump's first term, the dollar fell 15% in 58 weeks before rebounding. In the summer of 2017, however, a rebound lasting about two months managed to materialize before the latest downturn, which lasted until January 2018. While history may not repeat itself exactly, it can nevertheless serve as an interesting guide. Since the start of the US president's second term, the dollar has already fallen by 12.5% in 24 weeks, slightly faster than during Trump 1.0. While it is too early to claim victory and announce the end of the downward trend, several technical factors are worth noting: the dollar index (DXY) is at the crossroads between the upward channel that has been in place since 2009, with support at 96.20, and its consolidation channel that has been in place since the highs of 2022. Countertrend indicators are also close to horizontal support at 40. Thus, as long as 96.20 and 94.60 are not broken, we favor a stabilization of the dollar. To suggest a real trend reversal, it would need to break above 99.40/60.
If you are exposed to the dollar through investments in US stocks, it is more prudent to maintain your hedge while the downward momentum prevails. We should also bear in mind that a break below 96.40 would open the door to a further decline towards 90.00.
Elsewhere, the USD/JPY remains in its consolidation channel between 141.90 and 148.65, while the British pound is now close to a turning point at 1.3390, which must be held to preserve the upward momentum that has been in place since the beginning of the year.
