ANZ Research discusses the USD outlook into next week's FOMC minutes from the March meeting. ANZ thinks that the minutes will likely support the USD and advises using EUR/USD dips below 1.20 as a strategic opportunity to engage in long positions over the medium to long-term.
"The FOMC meeting last month unveiled a quite hawkish Fed, as the Committee was just one official away from signaling a consensus to hike every quarter (according to the dot plot). The minutes will likely provide more evidence of this upbeat, more hawkish Fed narrative and headlines may ultimately provide another leg of support to the USD.
On the back of this, we continue to look for a near-term move higher in the USD; especially, against cyclical and the euro (given positioning). We suggest using any fall below 1.20 to go long EUR/USD," ANZ argues.