We remain biased to adopt a ‘sell-on-rally’ for USD as the Fed is likely done with tightening for current cycle. But any USD sell-off may require patience and could only come when market narrative shifts into trading the expectations for ‘more rate cuts in 2024’ and this would be highly dependent on how data pans out.

A more entrenched disinflation trend and more material easing of labour market tightness, activity data in the US should bring about the shift and for the USD to trade softer. 

That said, USD still retains a significant yield advantage and is a safe haven proxy to some extent. As such, USD may still find intermittent support on dips especially if global, China growth momentum sputters and/or geopolitical tensions escalate or the ‘higher for longer’ narrative persists.