Richard Franulovich, Research Analyst at Westpac, suggests that a spike in risk aversion may save the USD on selected crosses near term but the beyond that the currency lacks underlying support. Key Quotes “Q1 growth expectations are in freefall, the Atlanta Fed’s latest nowcast pegging Q1 growth at just 0.4%. Markets are pricing a mere 20% chance of a June Fed hike given the time needed to rebuild confidence in the outlook after a soft Q1, not to mention the proximity of the UK EU referendum in June. But we won’t get too carried away - DXY downside shouldn’t extend much beyond key support into 92.5-93.0. Since Jan/Feb US financial conditions have eased and the PMIs have risen strongly. Developments a year ago could prove instructive. Back then a dovish March FOMC upended expectations and sent the USD sharply lower into mid-May 2015 before a steadily firmer complexion to the data and diminished Fed anxiety helped the USD stabilise.” For more information, read our latest forex news.