TD Research maintains its recommendation for being short EUR/USD targeting 1.1550, and long USD/CAD targeting 1.35 as its ToTW for this week.
"While cyclical forces point to a weak USD outlook, cracks emerge favoring a USD tactical squeeze. EURUSD has already breached daily uptrend from the May 2020 melt-up. 1.1695 presents the threat to bulls (range lows from August), that if broken, should expose 1.15 and reverberate across the G10. We are short EURUSD and long USDCAD," TD notes.
"More broadly, there is a dichotomy between EM and G10 USD indices. Thus far, EMFX has been more resilient than their G10 peers in resisting USD firmness. The latter has reverted to an inverse correlation with the SPX far more quickly than the EM composite. A catch-up of the latter should add pressure to the G10," TD adds.