Broader Dollar bear trend will have to take a short raincheck – ING

Will February’s Dollar gains be quickly reversed? A hawkish Fed can keep the Dollar supported a little further, in the view of economists at ING.

Fed will have little choice but to sound hawkish

“The Fed will have little choice but to sound hawkish. And some upward revisions to the Dot Plot fed funds expectation should support the recent hawkish re-pricing of the Fed curve. A severely inverted US yield curve is not conducive to the kind of benign USD decline that seemed likely in January.” 

“Central banks tightening into slowdowns will generate greater headwinds for risk assets. This again is not a particularly positive story for pro-cyclical currencies such as the Euro – at least in the immediate future.”