ING economists analyze how Wednesday's Federal Reserve meeting could affect the US dollar (USD).
No surprises from the Fed
The short-term reaction in the Dollar should be driven primarily by rate projections and other macroeconomic indicators. We expect an unchanged dot plot, but admit that a moderate revision seems more likely than a moderate one.
We doubt that the meeting will cause tectonic changes in the positioning of currencies. Potential dot chart adjustments point to some upside risks for the USD, but cautious optimism on disinflation points to a weaker USD.
Ultimately, the Fed may not offer enough reason for investors to deviate substantially from the 75 basis points of easing expected by the end of the year, and the dominance of a data-dependent view could delay any major move in the dollar. and currencies in general until the first half of April, when the key US figures for March are published.
We wouldn't be surprised to see a slightly stronger Dollar ahead of the FOMC announcement and for the DXY to finish the week near 104.00.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
