The FX market is tracking short-term rates more closely than ever in the face of wider uncertainty, and with positioning still short USD, the current uptrend can continue for a while longer. 

As the US economy continues to demonstrate resilience in the face of higher rates, the rates market is pricing out rate cuts and could yet contemplate the idea that a June Fed pause, or ‘skip’, could be followed by another ‘jump’.

Our long-term concerns about Dollar valuation and growth prospects make buying USD hard, but the wind is still clearly blowing in its favour.