The last two major USD tops had something in common

This is a chart of the US dollar index since the 1970s. In general, I'm not a fan of the DXY but here it illustrates the two major US dollar bull markets in the past 50 years.

The latest period is beginning to look similar, at least to the late-90s cycle.

So the question is: When is it time to sell the US dollar? In a note last week, Deutsche Bank highlighted how the prior two peaks ended: With intervention. In 1985 it was the Plaza Accord. On September 22, 2000, the Federal Reserve coordinated with central banks in Europe, Japan, Canada and the UK in selling dollars in its largest intevention. In buying 1.5 billion in euros (others also bought euros), it wasn't a monumental number but it was a strong signal and the dollar began a topping period over the next 15 months.

A report from the NY Fed shortly after the intervention blamed rising volatility and a too-strong dollar but this rings familiar with the current situation.

Market nervousness over additional bouts of volatility Volatility In terms of trading, volatility refers to the amount of change in the rate of an index or asset, such as forex, commodities, stocks, over a given time period. Trading volatility can be a means of describing an instrument’s fluctuation. For example, a highly volatile stock equates to large fluctuations in price, whereas a low volatile stock equates to tepid fluctuations in price. Overall, volatility is an important statistical indicator used by many parties, including financial traders, analysts, In terms of trading, volatility refers to the amount of change in the rate of an index or asset, such as forex, commodities, stocks, over a given time period. Trading volatility can be a means of describing an instrument’s fluctuation. For example, a highly volatile stock equates to large fluctuations in price, whereas a low volatile stock equates to tepid fluctuations in price. Overall, volatility is an important statistical indicator used by many parties, including financial traders, analysts, Read this Term increased as the euro reached new historic lows against the major currencies Currencies Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services. These are often issued by a specific government or collection of governments, by way of paper notes and coins. Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin. Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the popu Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services. These are often issued by a specific government or collection of governments, by way of paper notes and coins. Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin. Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the popu Read this Term, raising market perceptions of the possibility of official intervention in support of the euro

There is no talk of euro intervention at the moment but there's certainly talk of support for the yen.

Here's how it was done, according to the report:

The operation began at 7:11 a.m., with the euro trading at 0.8750 against the dollar, 2.0 percent higher than the closing price the previous day, and at 93.20 against the yen, 1.6 percent higher than the previous day’s close. The FRBNY trading desk operated intermittently until 9:20 a.m. Over the course of the morning, the U.S. monetary authorities acquired —1.5 billion against $1.34 million.

The euro gained 250 pips that morning.

It's an interesting bit of (largely forgotten) history but it also illustrates that it's been a long time since a major bull market in the US dollar ended without help. The dollar is such a strong global benchmark that when it strengthens it can create its own momentum and major overshoots.