Economists at Credit Suisse discuss EUR/USD, USD/JPY and GBP/USD outlook. 

Risk-reward for chasing GBP/USD even after its pullback since last week’s BoE meeting is not attractive

“EUR/USD came somewhat close to our Q2 1.1250 target when it hit 1.1092 in early May. We are not minded to buy this dip below 1.0900 until there is a significant reason to do so, such as a deeper decline in US data that validates current rates pricing.”

“Similarly with USD/JPY, as in recent weeks, we still see no reason to look for a move to emerge towards our original 125.00 Q2 target, with the BoJ’s ongoing dovishness signaled at its late-April meeting suggesting only levels above the 200-DMA at 137.05 offer decent trade location. Even then, like with EUR/USD, negative carry means a trigger is needed to re-engage with USD shorts.” 

“Turning to GBP/USD, the pair briefly exceeded our 1.2650 target on 10 May. But with EUR/GBP already at the low end of our long-held 0.8700-0.8900 expected range, the risk-reward for chasing GBP/USD even after its pullback since last week’s BoE meeting is not attractive.”