TD Research adopts a tactical bearish bias on EUR/USD targeting a move towards 1.17-1.16. TD will be looking to buy the dips round these levels strategically.
"Markets have started to roll over, revealing some excess froth priced into risk assets./A drawdown is a tide that lifts all boats, so the USD is the natural benefactor to any wobbles. It's probably not a surprise that the BDXY has rallied for the past three sessions. Still, these moves aren't the start of the USD bull market revival. We think it's worth 1-2% on the broad USD, with a higher beta to EMFX and some high beta currencies. For the EUR, that argues for a washout towards 1.16-1.17," TD notes.
"While there are many factors that one can cherry-pick to explain this reversal's start, it's likely a combination of things that have worked in concert. The list includes overpopulated themes, growth and price action gaps, US polling shifts, and seasonality," TD adds.