FOMC rate decision (Wednesday) will be the focus of the market. Analysts expect them to remove the word "patience" from the statement, suggesting that the decision whether or not to hike will be judged meeting-by-meeting from June onwards depending on the evolution of data.
Given that the removal of "patience" is widely anticipated by the market, the Summary of Economic Projections (SEP) and Chair Yellen's press conference will be more important for near-term prospect of the USD.
Barclays notes as follows on Monday:
- Our Rates research team expects somewhat dovish tone with Chair Yellen likely emphasizing a gradual pace of the hiking cycle given the subdued inflation backdrop (Losing patience, 12 March 2015).
- A possible dovish touch from the SEP and press conference is likely to weigh on USD in the very near term, but that would likely not change medium-term upward trend in USD and we prefer using any post-press conference dip in USD as opportunity to establish long USD position at better entry level.
