Finally, the Federal Reserve has already priced in two more hikes this year and three next year. This brings a proverbial ceiling to how much more hawkish it could become.
If global uncertainties clear up, we envision other major central banks will make larger strides down a hawkish path relative to what the Fed could do. This would weaken the dollar in a manner, similar to last May, under the same circumstances.
Back when the dollar peaked in the first week of 2017, on the heels of the 2016 U.S. presidential election, sentiment could not have gotten any more bullish. In hindsight, this start of a long-term downtrend, and this most recent bounce in the dollar presents an opportunity to sell.