US dollar: Buy the dips on a trend basis into Fed rate liftoff – BofA

Economics at the Bank of America (BofA) reiterated their bullish calls on the US dollar after witnessing the hawkish play of the US Federal Reserve (Fed).

BofA initially said, "Overall, the January FOMC meeting reinforces our view that the Fed will likely need to hike more than the market is currently pricing. This should push rates higher across the US rates curve & in a bear flattening bias."

The analytical piece adds that the USD strongly and broadly appreciated on the back of today's hawkish FOMC decision, with gains skewed somewhat toward lower beta FX - EUR, JPY and CHF.

“US dollar gains accelerated from an initially modest level post-statement release throughout Chair Powell's press conference,” per the US bank.

While concluding the findings, the investment bank said, “We remain bullish USD vs. low beta FX and would look to buy dips on a trend basis into rate liftoff as the market further prices in a more aggressive Fed and hence additional monetary policy divergence.”

Read: Fed Quick Analysis: Three dovish moves boost stocks, why more could come, why the dollar could rise