Fed stays hawkish despite no rate move. Economists at HSBC analyze USD outlook.

USD seems to be moving on risk appetite rather than rates

For the first time in over a year, the Fed kept rates steady but signalled more hikes ahead, given elevated inflation. 

Policy rates are moving close to their peak and this is likely to remain a headwind for the ‘safe haven’ USD.

It is notable that, so far in June, the USD appears to be taking its signal from risk appetite rather than US rates. So, while the Fed has guided policy rate expectations higher, risk appetite has come back as the key headwind to USD.