Although EUR/USD backed away from the edge yesterday, failing to close beneath a support area near 1.2875, we note that the greater bullish potential for the USD in general remains in place. Longer-term cycles and historical patterns suggest meaningful strength for the US Dollar Index in the coming months. In the near term, however, the market is cautiously bullish, given the gain of nearly 5.5% seen in the past two months. We prefer buying USD dips rather than chasing strength, given the signs of near-term consolidation.
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Barclays