Danske Research discusses USD outlook going into next week's September FOMC meeting.

The Fed remaining on hold next week would mark a short-term upside risk to our bearish EUR/USD view, but the exact vote split will matter a lot for the market reaction. If Warsh again votes for a hold despite his hawkish remarks at Jackson Hole, markets could reconsider their confidence in his communication. The outcome would likely mirror the repricing seen after the July meeting, with higher long-end inflation expectations driving curve steepening and broadly weaker USD FX.

However, if he votes for a hike, and simply fails to get the committee majority on board, we would expect markets to maintain pricing for hikes in the later meetings. At the end of the day, we think the macro case for tightening policy at a later stage is still very much alive. In the latter scenario, we would consider any temporary USD sell-off as a good opportunity to re-enter USD longs," Danske addas.