Synopsis:

Following Trump’s election win, ING notes that while the immediate risk has passed, investors are now challenged with positioning as they await more details on Trump’s policy agenda, which may not materialize until late 2025. In the interim, ING expects the DXY to consolidate in the 104.50-105.50 range as markets assess upcoming appointments and potential economic policy signals.

Key Points:

• Policy Uncertainty Ahead: Trump’s policy focus remains unclear and may not fully unfold until late 2025, leaving investors to monitor his social media posts and key administration appointments for hints on economic direction.
• DXY Consolidation Expected: ING anticipates a period of consolidation in the DXY index between 104.50 and 105.50, as recent USD gains pause while investors gauge future drivers.
• No Immediate USD Reversal: ING sees limited reason for the dollar to retrace recent gains significantly, as markets await clearer policy guidance.

Conclusion:

With Trump’s policy agenda likely delayed, ING expects FX investors to face positioning challenges, leading to DXY consolidation in the 104.50-105.50 range. The USD is expected to retain recent strength in the short term as markets await further direction from policy developments and key administration appointments.