Month-end model points to USD downside but other factors favour USD bounce – TD | Forexlive

TD Research discusses the USD outlook this week.

“Short-term drivers imply flat USD positioning and a nice discount.
Our positioning indicator, PIT, has moved about a full standard
deviation, bringing the USD to neutral levels (HFFV has the USD at a
nice discount). At the same time, the calendar and event risk favors a USD bounce through this week that should carry through 2023,” TD notes.

“While Fed speak could offer a mixed tone, Powell should emphasize
the need for a higher terminal rate. That message, coupled with our
expectations of a solid week of US data, favors consolidation. While month-end models point to USD downside, China’s COVID situation could pose a near-term challenge to perky risk markets,” TD adds.

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