Fed's Dot Plot and My USD Positioning
Watching the Fed's dot plot today, and it's interesting to see how the market digested it. No major surprises, but the general tone confirms a longer-than-expected hold, even with inflation cooling slightly. My current bias against $USD strength is definitely being tested. I'm keeping a close eye on $EURUSD for a break of the 1.07 level. If the Fed really is serious about keeping rates higher for longer, that could provide some fresh impetus for the dollar. For now, I'm holding off on any major CFD moves on the dollar until we get more clarity from next week's employment numbers. Just makes me re-evaluate some of the short-term shorts I had on USD pairs, particularly given $PYUSD is holding its peg so well today at 0.99966, showing that underlying stability in the digital dollar space, which I guess is a good thing for broader sentiment.
The market reaction to the dot plot seemed fairly priced in, not much of a shock. Are you considering the potential for a deeper recession given the Fed's stance, and how that might impact your EURUSD view even if 1.07 breaks?