The USD (DXY) reached new multi-decade highs in 3Q22 before softening in 4Q22 as some risks started to fade. The evolving conditions mean we may be leaving the peak dollar era behind us, but the process is unlikely to be linear and is subject to multiple risks and new spurts. Inflation, the growth outlook and risk appetite will set the underlying tone for the USD in 2023, while individual central bank actions and geopolitics complete the full and potentially divergent picture. In FX, there are always two sides to the story…