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Mar 27 - 10:55 AM

BofA: USD Dynamics Post-March FOMC: 'Birds of a Feather'?

By eFXdata  —  Mar 27 - 10:00 AM


BofA analyzes the short-lived USD selloff following the March FOMC meeting, attributing the initial decline to several perceived dovish indicators from the Fed. However, subsequent dovish actions or communications from other G10 central banks, such as the SNB's surprise cut and the BoJ's "dovish hike," have since weighed on their respective currencies, leaving the USD relatively strong due to converging rate cut expectations across G10 central banks.

Key Points:

  1. Fed's March Meeting: The initial USD selloff was fueled by factors such as the unchanged 2024 dot plot despite higher growth and inflation forecasts, the Fed's tolerance for recent inflation readings, and a strong labor market not deterring potential rate cuts.
  2. G10 Central Banks' Responses: Subsequent dovish stances from other central banks, including the SNB's rate cut and the BoJ's cautious rate hike, have contrasted with the Fed's position, impacting their currencies.
  3. Rate Cut Convergence: Expectations for June rate cuts across several G10 central banks are aligning closer to those of the Fed, maintaining rate differentials that favor the USD.
  4. Inflation Data's Role: Upcoming inflation figures will be crucial in determining future currency movements and central bank actions.


The USD's quick recovery post-March FOMC underscores the global central banking landscape's influence on FX markets. As G10 central banks adopt dovish or less hawkish tones, converging rate cut expectations help maintain the USD's advantage. The focus on upcoming inflation data across these economies will be pivotal in shaping future rate decisions and FX trends.

BofA Global Research


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