Credit Agricole CIB Research discusses the USD outlook and sees a scope for a top and turn into the FOMC May-4 meeting.
"King USD reigns supreme and its outperformance may persist ahead of the 4 May FOMC meeting. Ahead of that, rates markets are already pricing in three consecutive 50bp rate hikes in May, June and July. In addition, FX investors could be positioning for further market weakness ahead based on seasonality – eg, a rerun of the “sell in May and go away” price action in the coming weeks," CACIB notes.
"On the data front, the releases that will matter most for the USD this week will be the Q1 GDP data on Thursday as well as the March core PCE and the April University of Michigan Confidence Indicator on Friday. Our economists are looking for a sharp deceleration of US growth at the start of year and evidence that the Fed’s preferred inflation gauge has peaked. The data could mean that the Fed will not be as aggressively hawkish in the coming months as expected by the markets and thus can take the steam off the recent USD rally," CACIB adds.