Westpac - "US$ outlook: DXY should consolidate initially but with the backdrop of Fed QE and lower Eurozone tail risk, DXY should be rebuffed at 80, slipping back to 78.
As noted above, DXY should see some two way price action, with EUR/USD potentially probing 1.2850 initially. However, so long as markets don’t get too impatient with the Spanish govt as it weighs applying for ESM/ECB help, EUR/USD should be well supported on dips. There still looks to be a sizeable overhang of EUR spec shorts to be unwound, given lower European financial risk and the Fed’s $40bn of QE until the job market improves substantially i.e. no time soon."