The change in the Fed’s tone (and that of other central banks too) prompts us to recalibrate our outlook for the FX markets. We believe the bullish reaction in the USD post-FOMC could be prolonged in the short term by confirmation that stimulus will be gradually removed in 2H21. We expect the rest of the world to continue to synchronise with the US recovery as vaccination progress and economic recovery continue apace, and we believe the markets will remain focused on central banks’ next steps.
Read more of our take on recent economic developments and drivers as well as our market views latest forecasts in our new FX Insights publication.