Credit Suisse Research discusses the USD outlook and maintains a sell-on-rallies bias over the coming weeks.
"In the medium term, we stick with our negative USD stance. The bottom line is that, although we expect to see tough resistance to come through at key levels such as AUDUSD 0.70, EURUSD 1.14 and below 1200 in BBDXY, it seems too early to throw the towel in on our pro-risk, pro-cyclical set of trading views quite yet, and we remain committed to a “sell USD rallies” views, even if we are not going to formally extend our forecasts at this point as we normally do," CS notes.
"We accept that the risk-return profile is much less appealing than it was 3 or 4 weeks ago. But the argument for a wholesale trend change has not quite come through for us. And in recognition of the fact that a key aspect of this view is the idea of a persistently dovish Fed, we retain our longer-term USDJPY 105 target despite the risk-on view we have in general," CS adds.