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.

USD rallies will be quickly faded

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.