The US dollar is stronger today after the Markit services PMI
Credit Agricole CIB Research discusses the USD outlook and sees tactical downside risks in Q2 and medium-term upside risks in H2.
"We now see downside risks to our Q2 USD outlook but also upside risks to our H221 USD outlook as a whole and will be reviewing our G10 forecasts soon. In that, we will try to strike a balance between the positive USD-impact of the tighter US financial conditions, because of Fed policy normalisation, and the USD-negative impact of the global cyclical upturn," CACIB notes.
"We will also consider the fact that any positive USD returns on the back of Fed tightening may diminish over time given that the US exceptionalism could fade as the rest of the world," CACIB adds.
For bank trade ideas, check out eFX Plus.
