ANZ Research sees a scope for further USD upside over the coming months.
"Federal Reserve policy makers have calmed rates markets following the FOMC hawkish surprise. This has allowed risk assets to stabilise, albeit while the USD now has a firmer foundation for rallies. It will be important that policy makers do not induce policy uncertainty, which would feed into higher volatility in risk assets and amplify bouts of dollar strength," ANZ notes.
"Overall, we think markets have shifted to a more balanced investment environment, warranting an easing of cyclical risk and rising allocations to USD and value strategies," ANZ adds.