BNP Paribas FX Strategy Research discusses its USD outlook, arguing that positioning suggests that it's probably 'premature' to fade USD recovery around current levels, recommending waiting until USD long position becomes stretched on the prospects of passing US Tax reforms.
"While the potential for a USD short squeeze has been largely exhausted, the positioning measure highlights considerable scope for markets to build long exposure if the price and news momentum remains favourable," BNPP argues.
"We remain bearish on the USD in the medium-to-longer term, but would wait until long USD positioning has become a bit extended and the chance of a tax reform is more fully priced in before considering entering new shorts," BNPP advises.
Source: BNP Paribas ResearchOriginal Article
