TD Research discusses the USD outlook and notes that the increasing rhetoric on the trade front has squashed the global macro-narrative that characterized the past few months of trading.
"Markets have pivoted from data and central bank policy exists to headlines on trade policy, attempting to unpack a real trade war from a skirmish. This backdrop has also seen markets lack a firm conviction regarding the dollar's direction.
The focus on trade tensions misses an emerging short-term story that is mildly positive for the USD, especially following headlines from China on CNY devaluation," TD argues.
TD thinks expects USD/JPY to hold above the 105.50 level and EUR/USD to hold below 1.24.