Investment banking experts: Take history as a mirror The "bitter days" of the US dollar have not yet come to an end!

FX168 Financial Newspaper (Hong Kong) - The dollar experienced a "miserable" year in 2017, and in the first month of 2018, the dollar's situation seems to worsen further.

So far in January, the ICE dollar index has slipped 3.26 percent, which has also caused the dollar index to fall by more than 14 percent since the beginning of 2017.

So far in 2018, all major currencies have risen against the US dollar.

(All major currencies rose against the US dollar Image source: Bloomberg, FX168 Finance Network)

As you can see from the chart below provided by Westpac, while the dollar index has seen larger monthly declines in the past, the weakness in January this year is still unusual compared to historical standards.

(US dollar monthly performance Image source: Westpac, FX168 Finance Network)

Barring a significant improvement in the coming days, the dollar index is likely to record its biggest January decline since 1987 and its second-worst start since 1968.

Robert Rennie, head of financial markets strategy at Westpac, said the start to the year could be a harbinger of where the market is headed.

Commenting on the dollar, Rennie said: "Given that this is immediately after last year's about 10% decline, it now feels like a deep-rooted trend. ”

Rennie noted that the dollar's performance in 2017 and so far in 2018 is increasingly similar to that of the 2002-2004 period, when fears of the U.S. twin deficits (fiscal and current account deficits) hit the dollar hard.

"If history is the guide, the dollar decline is likely to continue," he said. ”

(U.S. twin deficit and dollar performance Image source: Bank of Montreal Capital Markets, FX168 Finance Network)

Bloomberg Forex strategists Jacob Bourne and Robert Fullem wrote on Friday that the dollar made its worst start since 1987 and that the dollar's "bitter days" may be far from over. The dollar has plunged more than 3 percent so far this year, and traders don't lack "ammunition" in betting on the dollar going lower.

The following chart is one of the most "terrifying" for the US dollar:

(ICE dollar trend chart Image source: Bloomberg, FX168 Finance Network)

The ICE dollar index is now approaching the 200-month moving average, and if it breaks below, it will be the first time in 15 years. The two most recent times the dollar index fell below this important level dates back to 1986 and 2003, when the dollar struggled for the next 5 years, plunging more than 25 percent to cyclical lows.

Proofreader: Bafit

This article originates from FX168 Finance Network

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