The overall message from the meeting was that the Fed is on track and delivered one of the three hikes it projected back in December 2016 -the Fed has not become more hawkish, notes Danske Markets Research.
“We expect the Fed to hike twice more this year (July and December) and three-four times next year. We expect the Fed to begin the reduction of its balance sheet in Q1 18,” Danske projects.
On the FX front, as EUR/USD bounced on the Fed announcement, Danske notes that technically short-term momentum indicators for EUR/USD are turning bullish and we could see a near-term move to the upper end of the recent 1.0350-1.0850 range.
“Hence, EUR/USD is in our view currently forming a base and we expect a gradual move higher later in the year forecasting the cross at 1.12 in 12 months,” Danske projects.
EUR/USD is trading circa 1.0738 as of writing.