Synopsis:

BofA sees technical similarities between the 2015-2017 and 2023-2025 USD cycles, with DXY forming a potential Q1 top. If history repeats, DXY may decline after peaking in early 2025, similar to its mid-2017 drop.

Key Points:

1. Historical Comparison – 2016 vs. 2024 Elections:

   • 2016: Post-election, DXY rallied 6.42%, breaking out of a two-year range, but peaked in Q1 2017 at 103.82 before a sustained decline.
   • 2024: DXY has rallied 6.32%, again breaking out of a two-year range, with a measured target of ~114, but has only reached the low 110s so far.

2. Potential Q1 2025 Top Forming:

   • If no higher high occurs in Q1 2025, DXY could be forming a similar topping pattern as seen in Q1 2017.
   • This setup suggests a potential reversal lower later in 2025.

3. Measured Move Target Still Valid:

   • While the 2016-17 rally only reached half of its target before rolling over, the 2024-25 pattern also shows DXY reaching just half of its projected 114.
   • Further upside is possible, but failure to break higher soon would increase the risk of a mid-year peak.

Conclusion:

DXY appears to be mirroring its 2016-2017 pattern, suggesting that if no higher highs occur in Q1 2025, the index may top out and reverse lower—just as it did in mid-2017. However, the measured move target of 114 remains intact, meaning further upside cannot yet be ruled out.