Analysts at TD Securities explained what they are currently watching.
"An initially bullish reaction for the USD following the Fed was unwound. While the hesitation might be due to the more important ECB meeting, the retracement of the USD is particularly telling that gains are harder to come by.
In this context, a higher median dot-plot is hardly a novel revelation for FX markets - especially as the bar to overcome this was low to begin with (requiring only 1 member to shift). The ball is now in the ECB's court. Though we expect the ECB to wait until July to announce taper, we look for a moderately supportive outcome for the EUR as this risk comes into view."
"Treasuries bear flattened after the June FOMC, but yields came back to flat as the curve remained flatter. The market will look to the ECB for further direction, but we have changed our Fed rate hike call and Treasury forecasts, looking for 4 hikes this year."
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