EUR/USD: Recent bounce is on borrowed time – TDS

An consensus-CPI print has helped the European Central Bank (ECB) hawkish message on QE resonate. But economists at TD Securities think EUR's 'elevated' status is on borrowed time.

USD/JPY dips should be faded

“With the US CPI numbers coming in on the screws in the top-line metrics, the ECB's hawkish message should be able to resonate for now. We think there is some hesitation for the EUR to move further topside however, given that the situation on the geopolitical front remains extremely fluid and the scope of the bounce in EUR/USD this week already.” 

“With inflation likely to intensify in the next couple of prints and the Fed beginning lift-off next week, we think the USD should be supported into the Fed decision.”

“We think that the JPY is increasingly looking like the cleaner expression of US-centric risks (Fed, inflation, etc.) especially as the BoJ is likely to pare back its growth assessment at next week's meeting. As such, we are biased to fade USD/JPY dips and look for a move higher near-term.”