Citi Research brings back the attention of FX traders to the cycles on the USD Index (DXY) long-term charts.

"Since 1975, USD bull cycles have lasted 5-6 years on average while bear cycles have lasted around 10 years. The latest USD bull cycle started in 2011.

According to past experience, this bull cycle may have ended and may start a bear cycle.

As of 2Q17, the ratio of central banks' USD holdings to overall FX reserves fell from 66% to 63.8%, reflecting central banks have gradually diversified their USD holdings into other assets," Citi notes.

Citi targets DXY at 90.26 in 3-months.

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