The biggest threat to economic growth is inflation. People’s savings and those on fixed incomes are devoured by it. The Federal Reserve’s first objective is obviously to control inflation, and the only effective tool at its disposal is raising interest rates. As anticipated, the Fed has increased interest rates many times to combat inflation, sending investors looking for haven assets like the US dollar. The dollar index (DXY) soared exponentially to current levels near 113 after forming a double bottom in January 2021 and May 2021, as shown in the graphic below. The large-scale factors that have caused the dollar to reach these levels are now widely known and well-documented. A very hawkish Fed wants to maintain a healthy balance between inflationary pressures. Equity underperformance and inverted yield curves are typical of this late-cycle economy.