Danske Research discusses the USD tactical outlook and sees a scope for a dip in EUR/USD, while USD/JPY remains supported in the near-term.
"The US virus situation and political and economic reactions are set to stay centre of attention for FX markets. Increasingly tense markets due to virus woes and as liquidity becomes scarcer into summer combined with stretched USD short positioning make the greenback prone to see support in the current environment. EUR/USD risks a dip while USD/JPY may hold decently," Danske notes.
"The political backdrop may further call for risk assets to take a breather with EU-UK trade negotiations due to re-start and prone to deliver confrontational headlines. Also, Biden’s lead in the polls as the US presidential election campaign moves closer to the radar of investors may dampen risk sentiment more broadly as his tax plan gets more attention," Danske adds.