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Feb 27 - 06:55 PM

USD: The USD Is Now Flat On The Year; What's Next And What's The Trade? - TD

By eFXdata  —  Feb 27 - 03:00 PM

TD Research discusses the USD outlook and sees a scope for further USD strength in the near-term but maintains a bearish bias over the medium-term (3-6 months).

"What a difference a few weeks make. While we expected a USD consolidation through Q1, the magnitude (and potential duration) has been a surprise. The USD is now flat on the year. The chief discussion point is whether the world is going through a positive growth shock that requires higher rates or sliding back into the depths of 2022," TD notes.

"We hold the weak USD thesis for the next 3-6 months, as the USD still weakens on a mix of higher rates and better global growth. Yet, a stronger USD remains the path of least resistance in the near term, underscoring the uncertainties of the next market regime. We prefer RV trades where a long EURCHF, AUDCNH, and short CHFMXN bias capture other market themes," TD adds. 

TD Bank Research/Market Commentary


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