Data will be in focus this morning, as the US reports June CPI. The market consensus is for the headline CPI and core CPI to remain at 2.1% and 2.0%.
Any uptick would be USD supportive, especially against JPY, EUR and CAD in the G10. However, we look for prices to remain unchanged in June and think USD will consolidate some of its recent gains as a result.
The DXY recently posted its largest one-week gain since May but we suspect USD bulls still have a few months to wait for a sustainable uptrend to take shape.
For EUR, we think there is some scope for a relief rally given the market maintains a sizeable short position and its technical position also looks overstretched.
Our FX Scorecard ranks EUR as the most attractive currency in the G10 and we look for a rise to 1.3590 amid a mild bout of position squaring.
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