Institutional FX Insgiths: JPMorgan Trading Desk Views 14/4/26
JPM G10 FX
The big trade is still the dollar failing to rally on bad news. That matters. Even with geopolitics still hot and energy elevated, USD price action has been underwhelming, which suggests the market is starting to lean back into the broader US credibility / asset rotation / USD debasement theme. Some of this is just a squeeze out of rebuilt long-USD positioning, but if the Middle East avoids full escalation, there is room for that story to run. I’ve been running tactical short USD since mid-last week; price action has validated that bias, though I’ve trimmed some USDCAD as conviction on the local driver is lower. I still like EUR longs, still prefer to sell USDCHF rallies, and remain more comfortable expressing bearish GBP via long EURGBP than outright cable.
EUR
EURUSD still looks constructive. The late-day acceleration yesterday was messy from a headline perspective, but the market is clearly willing to own euros on any sign the geopolitical temperature is not moving to worst case. Beyond the headlines, Europe’s relative policy cohesion and the re-emergence of the asset reallocation story are helping. Raise stops on EUR longs to a close back below 1.17. Next upside test is 1.1800/30.
GBP
Cable up, but EURGBP is the cleaner trade. Sterling benefits from the softer dollar, but the UK remains more vulnerable to an energy-price-led stagflation problem than Europe. That keeps me preferring EURGBP upside over chasing GBP outright. Flow-wise, hedge funds sold GBP again yesterday, while real money and systematics were modest buyers. Mann at 09:50 BST is the event to watch.
JPY
Still no strong view. JPY got hit again as the market took Ueda as not delivering enough, with April pricing cut from 14bp to 8bp and crosses pushing key levels. But I don’t love chasing yen weakness here with BOJ / MoF risk lurking if USDJPY gets too close to or through 160. Best left alone for now.
CHF
USDCHF lower still makes sense. The dollar’s failure to catch a real haven bid after the weekend is a bearish USD signal in itself, and CHF should stay supported while EURCHF remains well away from levels that would make the SNB uncomfortable. I’d still look to sell USDCHF on rallies, but conviction is not especially high. Also worth flagging CHFJPY near 204, a clear technical cap.
AUD / NZD
Still happy rebuilding USD shorts. The market wants to trade constructive headlines, and any path back toward talks keeps pressure on the dollar. The bigger macro point has not changed: this episode reinforces the view that US policy volatility erodes confidence in the USD over time. AUD underperformed a bit in Asia after weak confidence data, but that does not change the broader bias.
CAD
Less conviction here. I still do not love CAD medium term given weak domestic growth and labour data, but broader USD bearishness is becoming the more important driver. We’ve seen some real money demand for CAD, which is why I’ve cut back most USD longs and only hold a more modest short USDCAD view for now. Better to stay flexible.
Bottom line
Trade the dollar as soft, not as a haven.
Best expressions for me:
Long EURUSD
Long EURGBP
Sell USDCHF rallies
Be lighter conviction on USDCAD
Stay sidelined on JPY for now
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!