"But the dollar seems to be finding solid support here going into FOMC this week. Can there be something for a surprise, surprise?" Yes, there are a couple of things the Fed could do from here on that would be dollar bearish. A) They can omit to raise rates tomorrow given that it is not clear where the whack-a-mole banking turmoil is headed, and what else could be lurking in the tails of risk. They may opt to simply hold rates but threaten to raise rates. The problem is that this could be grossly misinterpreted by the market leading to a rally though B) They could raise rates, and signal a pause i.e. That any further hikes will depend on if the data becomes significantly worse. C) They could fail to do A and B, but if there are some dissenters it will come off as dollar bearish. To me it seems as if the Fed are in a bit of a corner. Will be really interesting to see what he says tomorrow. If they pause it will be epic given that the market is about 94% sure they will hike XD
"But the dollar seems to be finding solid support here going into FOMC this week. Can there be something for a surprise, surprise?" Yes, there are a couple of things the Fed could do from here on that would be dollar bearish. A) They can omit to raise rates tomorrow given that it is not clear where the whack-a-mole banking turmoil is headed, and what else could be lurking in the tails of risk. They may opt to simply hold rates but threaten to raise rates. The problem is that this could be grossly misinterpreted by the market leading to a rally though B) They could raise rates, and signal a pause i.e. That any further hikes will depend on if the data becomes significantly worse. C) They could fail to do A and B, but if there are some dissenters it will come off as dollar bearish. To me it seems as if the Fed are in a bit of a corner. Will be really interesting to see what he says tomorrow. If they pause it will be epic given that the market is about 94% sure they will hike XD