The guidance from Fed Chair Powell this week will be crucial for the USD – Rabobank

Economists at Rabobank discuss USD outlook. The Federal Reserve meeting on Wednesday holds the key.

USD could edge lower if risk appetite settles this week

“Another frantic weekend of action by officials over the future of Credit Suisse was aimed at nipping in the bud uncertainties that could provide the trigger for a systemic drop in confidence in European banks. However, the initial response in the market today suggests investors are not yet reassured.” 

“If risk aversion remains, the USD is unlikely to fall back too far. That said, the present of Fed swap lines suggests that if risk appetite settles this week the USD could edge lower.”

“Crucial to the USD outlook will be the tone taken by the Fed at this week’s policy meeting.”