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Analysts at Nordea Markets suggest that they have been surprised by the resilience of the US macro momentum compared to already lofty expectations (given how the rest of the world has surprised negatively), but there are tentative early signs that the US surprise index is now starting to fade from its lofty levels.

Key Quotes

“If the US starts to deliver somewhat less stellar data, it will ease the upside pressure on the dollar. In contrast, Euro-area economic data might also start to rebound as some of the adverse effects from the EUR’s rise last year will start to abate later this summer.”

Offsetting the likelihood of weaker US data denting the USD, the core inflation spread still favours the greenback.  Thus, while we have argued for a comeback of the dollar since early this year, near term risks seem to favour some further upside in the greenback. We are thus not yet ready to call the bottom in EUR/USD, why risks also remain elevated short-term in EM.”