Credit Agricole CIB Research discusses the USD outlook into next week's FOMC June policy meeting on Wednesday 6/13.
"Ahead of the Fed’s June meeting, markets are fully anticipating a rate increase. The key question for investors is whether the FOMC meeting will also signal more aggressive tightening later in the year. Better US data of late seems to argue for an upward revision to the Fed's dot plot.
At the same time, recent signals from a range of Fed officials that they may tolerate a temporary inflation overshoot before they consider more aggressive tightening seem to point to unchanged rate projections," CACIB argues.
"All of the above suggests that a dovish hike may be the most likely outcome. With speculative-oriented investors maintaining elevated USD long positions, such prospects should weigh on the USD in the week ahead," CACIB adds.