USD: BNP gives 4 reasons why dollar should soon start climbing again

In an analysis published this weekend, BNP Paribas gives 4 reasons why the dollar should rebound after several weeks of weakness:

"Against all expectations, the latest Fed meeting was less influential on the forex that the publication of Q1 US GDP figures.

The result led to a weak USD, but we do not think that this represents the beginning of a new trend, and we reiterate our bullish view of the dollar in the coming months, mainly due to the following factors:

1 / Expectations for Fed rate remain unchanged: The last Fed meeting did not change economists' forecasts of a rate hike in September.

2 / US growth should accelerate in Q2: The factors that weighed on the Q1 GDP should remain temporary.

3 / US short-term rates will increase: If the data improves as we expect, the 2-year US interest rate should increase, and the US rate advantage over the EUR will be even more obvious.

4 / Positioning on the forex is not extreme: Buyers' exposure to the USD fell to its lowest level in 2015, which indicates a large potential rebound via a new accumulation of long USD positions.