TD Research likes fading the USD rallies and buying EUR/USD dips into 1.17.
"The Fed meeting was undoubtedly hawkish, leaving us to pull our taper call forward by a month to November from December. That said, the USD's moment in the spotlight was fleeting, reflecting points we have discussed before. The main argument for our USD fade call is that tapering is only part of the normalization process," TD notes.
"The risk-on tone in light of the hawkish Fed implies the market is calling a Fed bluff on the dot plot outlook. What's more, our market positioning and valuation models had the USD front-running the Fed, limiting its follow-through. In turn, the Fed has done little to distract us from our fall USD playbook that calls for fading rallies in light of modest reflation revival. We like buying EURUSD dips towards 1.17, while CADJPY topside flows well with these themes and among the cheap G10 crosses," TD adds.