Has the greenback gone too far? Perhaps a hawkish Fed may not be enough after the recent stretch. Here is the view from BTMU:
Here is their view, courtesy of eFXdata:
BTMU Research discusses the USD outlook around the FOMC decision on Wednesday.
“The Fed is expected to acknowledge that inflation has come closer to their goal in tomorrow’s updated policy statement. However, we see no strong justification at this stage for the Fed to materially alter their outlook for policy.
At the March FOMC meeting, the Fed signalled that their updated plans for “further gradual” hikes involved potentially delivering a further two or three hikes this year, three more hikes in 2019, and two more hikes in 2020. The market has since moved to price in a higher probability of a further three hikes this year.
The pricing appears reasonable at the current juncture and therefore provides a higher hurdle for this week’s updated FOMC statement to provide a fresh hawkish trigger to reinforce the US dollar’s current upward momentum,” BTMU argues.
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