US Dollar Index to find support in the 102.00/30 area – ING

FXStreet Insights Team FXStreet

The dollar is weaker across the board after the FOMC meeting. In the view of economists at ING, soft landing seems wishful thinking. Subsequently, the dollar is set to remain bid on dips.

Sustained USD decline would require confidence that the Fed can deliver an orderly tightening cycle

“A sustained decline in the dollar would require confidence that the Fed can deliver an orderly tightening cycle, taking the steam out of the US economy and delivering a soft landing. It seems far too early to make that call given the lingering fears of inflation and the risks that the Fed cycle is re-priced even higher were, say, the Dot Plots in the June FOMC release to project the policy rate well over 3% in 2023.”

“The broad sell-off in the dollar looks more a function of a technical correction to overbought conditions. DXY could well find support in the 102.00/30 area as we await tomorrow's US April Nonfarm Payroll release. Another strong rise in average earnings tomorrow warns that the Fed has its work cut out in trying to keep inflation under control.”

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