Credit Agricole CIB Research warns from selling the USD before the official end of the current Fed hiking cycle.
"The recent banking sector turmoil has fuelled concerns about aggressive tightening of credit conditions and intensifying recession risks in the US. It has also forced the Fed to deliver a dovish rate hike in March, seen by many as pre-announcing the end of its tightening cycle in May," CACIB notes.
"Our recent historical analysis of FX price action during the past six Fed tightening cycles since 1980 has suggested that investors should not sell the USD before the Fed is actually done hiking. Indeed, it seems that the combination of ongoing Fed hikes and intensifying recession risks tended to offer the USD a moderate boost on average" CACIB adds.
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