MUFG Research discusses the USD outlook and maintains a bullish bias, expressing that via holding a short GBP/USD targeting a move towards 1.21.
"USD performance continues to be driven primarily by fluctuations in investor risk sentiment. From that perspective it is not surprising that the USD started to rebound in the days following the recent peak in global equity markets on 8th June. The modest rebound in the USD so far is consistent with the modest correction lower in global equities," MNUFG notes.
"It suggests that USD performance will continue to be driven by fluctuations in risk off/ risk on sentiment until the COVID shock fades further and there is more clarity over the outlook for the global economy...We expect the USD to rebound further in the near-term," MUFG adds.