The DXY Dollar Index has fallen 3.0% since it peaked on January 13. Weaker-than-expected consumer spending and sentiment as well as gains in foreign currencies have weighed on the dollar. DeepSeek might also have contributed to the recent weakness of the dollar. But despite some near-term selling, the DXY is still up 3.0% since the November 5 election (chart). It also remains at one of its highest levels of the past decade plus. We think the dollar will remain relatively strong.
Consider some of the recent drivers of the dollar:
