Richard Franulovich, Research Analyst at Westpac, suggests that the near term USD outlook looks very bleak, as the full import of Chair Yellen’s decidedly dovish tone continues to reverberate the USD could see another 2-3% USD downside from current levels. Key Quotes “Freefalling Q1 growth expectations are not helping matters either, informed forecasters stripping a good 1ppt off Q1 in barely a couple days to the 0.5-1.0% range. If confirmed by more soft data in coming weeks Chair Yellen’s caution will be validated and a June hike would be off the table given the time needed to rebuild confidence in the outlook, not to mention the proximity of the UK referendum in June. All told not an inspired USD outlook but we won’t get too carried away. DXY downside shouldn’t extend beyond support levels into 92.5-93.0. Weak hard US data for Q1 is a Jan/Feb story, since then US financial conditions have eased sharply and all regional 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.