Societie Generale Research discusses its latest USD and GBP outlook over the coming months.
"Sterling is particularly vulnerable to a poor global backdrop. Brexit was never going to be easy for the economy, and with the risk of no trade deal or only a de minimis one being agreed with the EU before the end of the year, the UK has more economic downside than most and sterling could be vulnerable. A new cycle low in GBP/USD under 1.15, a move above EUR/GBP 0.95 and a new all-time GBP/JPY low below 110 would be likely," SocGen adds.
Credit Suisse discusses NZD/USD technical outlook and adopts a neutral bias in the near-term.
"We look for the current rangebound environment to continue for now, however we eventually look for a break above .6554 and then the current June high at .6584. A sustained and closing break above here would reinforce thoughts of a broader change in trend to the upside, with resistance then seen at .6665," CS notes.
Societie Generale maintains a structural bearish bias on GBP and likes short exposure vs JPY and SEK.
"We highlighted sterling's vulnerability to an L-shaped recovery, which always looked more of a risk than a V. The odds are even worse, now. We like shorts in GBP/SEK, and here, in GBP/JPY too," SocGen adds.
Bank of America Global Research discusses the USD outlook and maintains a bullish bias through year-end. BofA targets EUR/USD at 1.05 and USD/JPY at 103 by year-end.
"We expect recent USD losses to reverse over the coming months, as severe global recession, US economic outperformance and renewed financial market stress support USD demand and keep the dollar in overvalued territory.
Credit Agricole CIB Research advises against buying CHF around current levels. CACIB is short CHF via a structural long EUR/CHF position targeting a move towards 1.15.
"View wise, we continue to advise against buying the CHF at these levels with both the SNB outlook and elevated speculative long positioning likely to prevent another meaningful leg higher," CACIB adds.
UOB discusses USD/.JPY technical outlook and adopts a tactical bullish bias in the near-term.
"USD moved above the top of our expected 106.40/107.80 range yesterday (high of 107.87). Upward momentum is beginning to improve and USD could strengthen towards 108.40. As the build-up in momentum is still in its nascent stage, it is too early to expect a sustained move above 108.40," UOB notes.
"On the downside, a breach of 107.00 (‘strong support’ level) would indicate that the current upward pressure has eased," UOB adds.
Bank of America Global Research flags a scope for a death cross on the USD Index 'DXY' to occur in the coming weeks.
"The May/June USD decline has pulled two popular simple moving averages (SMA) close to a bearish signal often called a death cross," BofA notes.
"The 50 day SMA is falling fast toward the 200d SMA, which is falling slightly. Here is what history suggests should the 50d cross below the 200d in the coming days. Considering all 26 signals since 1980, the DXY is lower 18 times 5 days later and 16 times 10 days later. Thereafter the signal is inconclusive (Table 4). When the 200d is also declining, like it is now, a bearish trend developed 7 out of 9 times," BofA adds.
Credit Suisse discusses AUD/USD technical outlook and flags a scope for a move higher in due course after completing its current consolidation phase in the near-term.
"AUDUSD remains in a short-term consolidation phase, although constructing what looks increasingly likely to an ascending bull ‘triangle’ continuation pattern. With this in mind, we keep our view unchanged and look move higher in due course towards the upper end of the triangle at .6975/77, where we would expect to see fresh selling at first. Removal of here on a clear and closing basis would confirm the bullish pattern, see a minor base established and suggest further upside is likely in due course. Resistance is seen thereafter at .7005, removal of which would see a renewed test of .7032/41 and .7063," CS notes.
UOB Research discusses GBP/USD technical outlook and flags a scope for a consolidation phase.
"After dropping sharply for a few days in a row, the sudden and sharp bounce in GBP yesterday came as a surprise. The rebound edge above our 1.2400 ‘strong resistance’ level (high of 1.2402) and the weak phase that started last week is deemed to have run its course," UOB notes.
"The current movement in GBP is likely the early stages of a consolidation phase. So, GBP is expected to trade sideways, likely between 1.2280 and 1.2480 in the very near-term," UOB adds.
Credit Suisse discusses USD/CAD technical and flags a scope for a bear wedge pattern targeting a move towards 1.3491/86.
"USDCAD has failed to follow through on its recent close above the 1.3686 high USDCAD which reinforces the view of an extension of the consolidation range and turn our thoughts towards the potential for a bear ‘wedge’ continuation pattern, which would reinforce our bias for break lower in due course as well as the existing large bearish ‘descending triangle’ continuation pattern that is still in place. With this in mind, we see support initially at 1.3575, ahead of the pivotal 200-day average at 1.3491/86, beneath which would trigger the pattern to suggest the core bear trend is resuming," CS notes.
"In contrast, a close above 1.3686 would see the correction higher continue, with 1.3716/19 the next resistance, above which should see a move back to the more important breakout point and 55-day average at 1.3828/56, which ideally caps any further upside if reached," CS adds.
Citi maintains a bullish bias on EUR/USD this week.
"CitiFX Strategy remains bullish EUR this week and looks for a move into the 1.14s. In the short-term, there is scope for a bit more EUR-optimism linked to the EU recovery fund and a less threatening German Court ruling, while global investors appear to reduce EUR underweights.
As for risk events, watch July 8 as EC President Von der Leyen has invited German Chancellor Merkel, European Council President Charles Michel, and European Parliament President David Sassoli, to discuss her budget and recovery plans ahead of the July 17 -18 European Council summit," Citi notes.
"Levels wise, watch 1.1185 on the downside, and 1.1350 on the topside," Citi adds.
SEB Research flags the best G10 Seasonal trades to play for the month of July.
"For July, the most noticeable seasonality is stronger NZD and weaker CHF," SEB notes.
The seasonal basket we suggest for July contains four positions: Short CHF/JPY, long NZD/CHF, short GBP/NZD and long EUR/NOK. Such a basket would in the past five years have gained 0.8% per year on average, returned 3.5% in total with a positive return on all years," SEB adds.
CIBC Research discusses USD/CAD outlook and targets the cross at 1.39 in Q3.
"Much of the surprising rebound in the Canadian dollar since late March was tied to the loonie flying with the flock of other majors’ gains on the greenback, with a tailwind from a turn in crude prices. We’ve reduced our targets for C$ weakness ahead due to that recovery in oil. However, we do not believe the Canadian dollar will be able to sustain that run, and will see 1.40 again at some point during this recovery," CIBC notes.
