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The FOMC kept rates on hold at 5.25%-5.50% for a fourth consecutive meeting in January. Economists at TD Securities analyze Dollar’s outlook following Fed’s decision.
The Fed has seemingly priced out March as the start of the cutting cycle. Near-term, that could provide some support to the USD, though we also know that the Fed’s next move is likely to be a cut. We think USD rallies will be quickly faded, especially if the data validates the disinflation narrative ahead of the next meeting.
Good growth plus disinflation remains bearish for the USD.