Synopsis:

Credit Agricole highlights a strong historical pattern where the USD often reverses its May direction in June—suggesting potential gains this month. A firmer U.S. economy and fading trade risks could support the greenback.

Key Points:

• Seasonal Pattern:
  Since 2005, in 85% of cases, the USD reversed its May trend in June. Given its recent softness, this points to a possible USD rebound.

• Macro Catalysts:
  A reversal would be supported by signs that the U.S. economy is more resilient than feared and that the Fed may not be as dovish as markets are pricing in.

• Tariff De-escalation Boost:
  Continued easing of trade tensions could support U.S. equity inflows, reinforcing dollar strength via capital demand.

• Policy Uncertainty Lingers:
  The ongoing legal battles over Trump-era tariffs continue to muddy the policy outlook, but the broader risk backdrop may favor USD flows.

Conclusion:

Credit Agricole sees a strong case for seasonal USD strength in June. With improving macro signals and fading trade tensions, the dollar could recover ground lost in May—especially if the Fed pushes back against market dovishness.