Sellside Views Vary on Sustainability of Post-CPI USD Weakness

Many sell-side analysts see the post-CPI USD downleg as having further to run, but some are more cautious – a quick summary of views below:

• JPM FX see the current USD move lower as having legs, at least in the short-term. As such, they remain short USD, particularly against EUR, AUD and CAD, looking to add on USD rallies.
• Credit Agricole see EUR/USD as still looking cheap relative to the S/T fair value, with Ukrainian developments potentially playing a key role going forward.
• RBC write that the close of the USD Index below the 100-day SMA is the first since Jun’21, opening the potential for a fresh leg lower for the dollar correction.
• Berenberg write that the CPI release was supportive of EUR/USD long-term, but the large move has high short-term correction potential.
• ING see it as too soon to call for a broad dollar downtrend, with a Fed pivot not a given and risk assets still facing a variety of headwinds. As such, ING remain moderately bullish USD.