The IMF may have surprised markets by slashing its growth forecast for the US from 2.8 percent to 2 percent, but London-based trader Neil Staines from the ECU group says he likes the dollar “very much”. Speaking about the FOMC’s two day meeting which takes place this week, he thinks it is “very dangerous” for the federal Reserve to keep a dovish approach despite the downgrade.

Investors are waiting to see commentary out of the Fed that gives the market guidance on tapering and also when the first rate hike will take place. Lower interest rates make the dollar less attractive to investors by reducing returns on dollar-denominated assets.

The IMF cut its forecast for US economic growth because of a harsh winter and a struggling housing market. It also thinks US inflation will stay below the Federal Reserve's 2 percent target through 2017.