(Bloomberg) -- The dollar’s bullish run since the end of May could finally have reached an exhaustion point.

Money markets on Wednesday priced in for the first time a further 225 basis points of Federal Reserve interest-rate hikes by the end of 2022, the sharpest pace of tightening since 1994. The FOMC’s latest minutes later in the day detailed the Fed’s plan to shrink its balance sheet by more than $1 trillion a year. The Bloomberg Dollar Spot Index advanced a fifth day, yet closed near the middle of its intraday range.

At the same time, the euro and the pound, which were trading toward their cycle lows, managed to trim losses and close just a few pips lower on the day. One-month risk reversals on the Bloomberg Dollar Spot Index, a barometer of market positioning and sentiment, failed to rise above the March 18 peak and remain well off cycle highs. It could be that the greenback has exhausted support from an ultra-hawkish Fed and needs exogenous factors to extend its rally. And according to DeMark TD Sequential, a technical indicator, the dollar gauge is about to turn lower.

The so-called Sell Countdown was completed Wednesday on the daily chart. Typically, following this signal, the price is expected to decline within the next 12 bars. Since the pandemic begun, DeMark TD Sequential formed a Countdown five times and was successful in capturing trend reversal at all times but one. It remains to be seen whether the latest signal will indeed mark a retreat for the U.S. currency.

• NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg’s Markets Live. The observations he makes are his own and are not intended as investment advice.

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