The U.S. dollar recently soared to multi-year highs, prompting some analysts to argue that the currency’s latest rally has already accounted for the so-called “Trump Trade,” leaving limited upside potential and opening the door for bearish positions on the greenback.

On Friday, the U.S. Dollar Index climbed 0.5% to 109.67, briefly touching 109.91—a level not seen since November 2022. According to Chester Ntonifor, a Foreign Exchange and Global Fixed Income Strategist at BCA Research, this milestone suggests the dollar has reached an overvalued state.

“If the DXY surpasses our 110 target, it’s time to start selling the dollar,” Ntonifor wrote in a recent report. He explained that factors such as slowing global growth, a hawkish Federal Reserve, and expectations of a Donald Trump presidency have already been factored into the dollar’s current valuation. Reaching this threshold, he noted, signals the “Trump Trade”—a market phenomenon tied to Trump-related economic policies—is fully priced in.

Ntonifor’s bearish outlook on the dollar aligns with his belief that U.S. inflation, which has been a key driver of the dollar’s strength compared to other markets, is nearing its peak. Although December’s employment data showed resilience in the labor market, he predicts that tightening financial conditions in the U.S. will eventually weigh on economic growth.

Looking ahead, Ntonifor envisions a scenario unfolding later this year where equity markets experience a correction, the dollar weakens, and bond yields decline. Such a shift would reflect a broader economic slowdown and a recalibration of market expectations.

For now, the dollar’s elevated levels offer a compelling case for traders to start considering bearish positions, particularly if the DXY surpasses the 110 threshold. The evolving economic landscape suggests that the currency’s recent strength may soon give way to downward pressure.