The dollar has remained bid ahead of tomorrow's Federal Reserve meeting. Analysts at ING think it is still risky to pick the top in the dollar rally given the prospect of aggressive tightening and the challenging global environment for risk.

Dollar remains supported into the FOMC

“Even if the Fed-induced strength might appear more limited now that an aggressive tightening cycle has been priced in, an external environment where markets find other key non-US markets unattractive (namely, China due to lockdowns, Europe due to geopolitical risk, other emerging markets due to tightening financial conditions) offers quite a solid floor to the dollar.”

“We continue to see high-beta/commodity currencies being at risk in the current choppy environment for risk sentiment, and the DXY (where low-yielders have a big weight) may not be a very indicative benchmark for dollar strength at the moment. Still, a move into the 104/105 range into the Fed meeting seems reasonable.”