The US dollar has experienced a rather shocking 2017 so far, with the dollar index going from a 14-year high in January to a 14-month low in August. In the eight months of 2017, we have only seen gains for the month of February, with the rest showing sharp losses.
Interestingly, the gains seen throughout 2016 came amid a backdrop of the Federal Reserve (Fed) which only delivered a 0.25% rate hike for the year, despite predictions of 1.10% rate rise over 2016. This year we are seeing the Fed deliver, yet this seems to be overshadowed by an increasingly hawkish stance from the likes of the Bank of England (BoE) and European Central Bank (ECB), coupled with a slipping timeline for Fed rate hikes.
However, with inflation in both the UK and mainland Europe abating, there is an argument that we will see a shift back into the dollar. Crucially, we can see that the dollar index is back at an absolutely critical support level, with the 2005 high of 9253. That support zone looks as good a place as any to watch for a bullish reversal.