Federal Reserve Board and Federal Open Market Committee release economic projections from the March 17-18 FOMC meeting

What the desk is arguing

The desk frames this as a pivotal moment for USD strength, driven by the Fed's updated economic projections. The central bank's focus on inflation control, despite signs of slowing growth, suggests a commitment to maintaining higher interest rates for longer, which typically supports the dollar.

Supporting evidence includes the Fed's revised GDP growth forecast, which now sits at 2.1% for 2026, down from previous estimates. This adjustment reflects a more cautious economic outlook, potentially leading to increased demand for the USD as investors seek safe-haven assets amid uncertainty.

Where it sits in our coverage

Our consensus target for the USD is 1.075, with a range of 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 - bofa: 1.04

This view aligns closely with jpmorgan, which is positioned at the upper end of the range, while bofa presents a more bearish outlook, suggesting divergence in market sentiment.

How other firms see it

Firms like jpmorgan and citi are aligned with the desk's bullish stance on the USD, anticipating further strengthening as the Fed maintains its hawkish tone. Conversely, bofa and goldman are taking a more cautious approach, predicting potential weakness in the dollar if economic conditions deteriorate further.

Key pairs to watch include USD/JPY, which often reacts sharply to Fed policy changes, and EUR/USD, where the divergence in monetary policy between the Fed and the ECB could create significant volatility.

What the calendar says

With the FOMC Minutes scheduled for May 20, traders should be prepared for insights into the Fed's decision-making process that could further impact USD sentiment. Additionally, housing starts and building permits data on May 21 will provide further context on the health of the U.S. economy, influencing market expectations ahead of the next FOMC meeting.