Mind the gap!DISCLAIMER
NO BUMS allowed, if you don't like making money and consistently downvote radical ideas and thinking because you are bitter and haven't made money for the past 12 months, then stop following me and LEAVE. This is a strictly NO-BUMS allowed post....
DXY usually follows deficit, and although for the past 10 years, we have seen stagnating growth in the EU and Japan, I think we could see a different story for the next 2 years. The US cannot continue to spend money it doesn't make and put it on the countries credit card (see story on 1.6Tr spending bill approved) and not suffer any consequence to its already mamouth 34Trill debt. Something has got to give, they either stop spending (aint gonna happen, it's war machine needs the money) or the Dollar will crashes down to 89....
At some point, investors will stop buying government bonds, wanting to be better rewarded for taking on the risk. This means the treasury will have to resort to its mom and dad bank (Fed reserve balance sheet) when it comes to funding its spending. Already Fed presidents Lorie Logan suggested slowing asset runoff as reverse repo dries up. This is a precursor to restarting QE later this year when the Treasury has to refinance 10Tr worth of debt and it fails to find any bidders at a paltry 2.5% (which market participants are suggesting is the neutral rate).
In another view, EURUSD typically benefits from a fall in dollar such is the historical basket weighting being heavy German Deutsche Mark
Good hunting, and remember, don't be a bum by downvoting fresh ideas!