The US dollar forecast suggests that the DXY could be following a similar trajectory to its 2015-2017 cycle, raising the possibility of a market top forming in early 2025, according to Bank of America’s technical strategist Paul Ciana.

Since the 2024 US election, the DXY has experienced two significant rallies, amounting to a 6.32% gain, breaking out of a two-year range. Ciana suggests that this movement could push the index toward a target of 114, mirroring the post-election rally seen after 2016.

At present, the DXY has already climbed to the low 110s, reaching halfway to its target. However, if the index forms a lower high around 108.50 and subsequently declines, it could signal a market top, much like the pattern observed in early 2017. Back then, the DXY peaked at 103.82 on January 3, 2017, after a 6.42% rally post-election, before forming a head and shoulders pattern and declining through August 2017.

Ciana warns that a retest of 110 could create a double top, strengthening the case for a downward shift. However, if the DXY surpasses previous highs, it may invalidate this pattern and push toward 112.50, potentially revisiting the 114 level last seen in 2022.

Traders and investors are closely watching the US dollar forecast, as key levels could define the currency’s trajectory in 2025, with broader implications for global markets and monetary policy.