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Mar 22 - 12:55 PM

USD: Upward Pressure On The Broad USD As The Narrative For Fed Larger Rate Hikes Unfolds - Danske

By eFXdata  —  Mar 22 - 10:45 AM

Danske Research discusses the USD outlook in light of the Fed policy trajectory.

"The key event yesterday was remarks by Powell. In essence, nothing substantially new was said. However, no FOMC members so far are not ruling out the potential need for larger rate hikes, we think. Our formal expectation is +50bp in June but given the current remarks, markets may well come to expect this at the next meeting in early May. Irrespective of timing, the door is clearly wide open to accelerate the plan to tighten financial conditions. These remarks fuelled a sell-off in US bonds and the 10yr rose 14bp to now 2.29%," Danske notes.

"We continue to see upwards pressure on the broad USD as this narrative continues to unfold. For EUR/USD, we also see downside risk, targeting 1.05 in 12M on the back of a more forceful Fed and many other factors," Danske adds. 

Source:
Danske Research/Market Commentary

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