Bank of America Global Research maintains a bullish bias on the USD through the rest of the year.
"With US equities at a new all-time high and global equities not far behind, we see reasons for caution ahead of high uncertainty in the rest of the year.
1- We expect data to weaken in the months ahead, following the strong rebound from lockdown effects. Higher Covid-19 infections in Europe and Asia in recent weeks suggest that no economy can fully reopen, again pointing to a weak recovery.
2- Macro policies may not be able to come to the rescue this time. There is no deal yet for another fiscal stimulus in the US, while a number of benefits have already expired...
4- The US election is another risk that markets may be underpricing. Market volatility tends to increase before and after US elections...
5- An early Covid-19 vaccine would be a positive, but we are concerned that the market may be already too optimistic," BofA notes.
"Given the strong correlation of the USD with risk sentiment, our concerns make us positive on the USD for the rest of the year, against a still bearish USD market consensus," BofA adds.