In the view of FX strategists at National Australia Bank (NAB), if the Fed maintains its inflation outlook and hawkish bias, despite recent softer data, the US dollar is likely to rally hard on the FOMC decision.
"If no upsets here, then what if anything happens to the 2018 dots - and the narrative surrounding them in Yellen's post-FOMC press conference, should be important"
If the Fed highlights that the medium-term outlook for inflation or rates hasn't really changed despite recent softer data, there is potential for the USD to rally out of the FOMC"
"We continue to expect this, hence our still bullish USD H2 2017 forecasts, for all bar EUR/USD"
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