This from Morgan Stanley is via

the folks at eFX.

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  • "Our forecast of a DXY at 118 by year end would imply a fairly large move over the next three months. Is that justified? We think so," MS notes.
  • "Take the DXY's relationship with the market-implied terminal rate, for example. Currently at 4.6%, or roughly in line with the Fed's SEP dots and our house call. But what if in the coming weeks and months data fails to meaningfully decelerate? Won't the market have to price in more risk of rates rising to and above 5%? ... a higher market-implied terminal rate could generate the DXY up to 118," MS adds.

118 is not that far away given the magnitude of the weekly moves lately:

dxy 28 September 2022