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Bank of America highlights that historically, the US Dollar Index (DXY) tends to rise from August through US election day in November, suggesting potential USD strength leading into the upcoming election.
Key Points:
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Seasonal Trends: Since 1970, the DXY typically shows strength in August, weakness from September to mid-October, and then regains strength into late November before declining towards year-end. This trend has been consistent, with the DXY often peaking by August.
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Impact of the Euro: Since the euro began trading in 1999, the DXY has shown a tendency to rise from early August through late November, with a subsequent decline into year-end.
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Election Year Trends: In the last 13 US election years, the DXY has generally trended higher from 70 trading days before election day up until the day itself. This pattern was observed in 10 out of 13 election years, with the DXY rising as much as 77% of the time during this period.
Conclusion:
Bank of America observes a historical pattern where the USD tends to strengthen from August through US election day. This seasonality suggests a potential for the USD to trend higher as markets approach the upcoming election in November.
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