JPM G10 FX

Overview

G10 FX remains dominated by geopolitical headline risk, with sentiment swinging sharply between de-escalation hopes and renewed caution as developments around the Strait of Hormuz continue to drive price action. Friday's late risk rally has already lost some of its gains after mixed signals over the weekend, showing that there is still a lack of strong confidence in the market and that short-term strategies are more suitable than long-term bets.

While tomorrow’s Warsh confirmation hearing may briefly compete for market attention, the near-term FX backdrop remains shaped primarily by the interaction between Middle East headlines, oil, rates volatility, and dollar direction.

EUR

The euro was swept higher in Friday’s risk rebound, briefly breaking above nearby resistance, but the move faded quickly even before weekend tensions revived broader caution. That reversal suggests the rally encountered meaningful supply, likely reflecting a mix of profit-taking, corporate interest, and reallocation into higher-beta or carry expressions rather than conviction in a sustained euro breakout.

The broader view remains one of measured euro support against the dollar, but with greater caution after the recent move off the lows. The argument still leans more toward a structurally softer dollar than a particularly bullish Eurozone story, though the market has already covered significant ground. Near term, the low 1.17s remain an important area to hold, particularly ahead of a moving-average cluster around 1.1675–1.1700.

Positioning preference remains for a reduced core EUR long, alongside selective relative-value expressions including long EURGBP and short EURHUF. This week’s PMI releases will also matter, particularly for signs that geopolitical disruption—such as transport and fuel supply concerns—is beginning to weigh more visibly on sentiment.

GBP

Sterling continues to trade in a complex mix of external dollar dynamics and idiosyncratic UK political risk. While the broader thesis of a softer dollar driven by an “erratic US policy premium” still has merit, GBP is not the preferred expression of that view. Recent UK data have been somewhat firmer, but not sufficiently fresh or decisive to materially shift the domestic outlook.

At the same time, the political backdrop has become less supportive, with the Mandelson controversy gaining traction and introducing an additional source of uncertainty. Even if near-term geopolitical concerns push domestic political issues temporarily into the background, the wider optics around the episode are not especially constructive for sterling sentiment.

Against that backdrop, EURGBP remains favoured on the topside, with 0.8680 and 0.8750 as key levels to monitor. Flow patterns over the past week have also leaned toward selling of sterling crosses. In GBPUSD, the pair remains near the lower end of its recent 1.3480–1.3600 range, with 1.3480 continuing to act as an important pivot since the onset of the conflict. This week’s UK labour market data and March CPI will be the main domestic macro markers.

JPY

The yen remains a less straightforward safe-haven expression than usual. Although Friday’s reversal in oil briefly drove underperformance in cross-JPY, the broader backdrop still argues against assuming a sustained yen rally if geopolitical tensions ease. The key issue is that even under a more constructive scenario, it is difficult to see energy markets fully normalising quickly, which limits the scope for a clean unwind of recent macro pressures.

Domestic Japanese developments are not especially supportive either. Expectations around the Bank of Japan have softened, with the market now pricing only a very modest amount of tightening into next week’s meeting. Recent communication from Governor Ueda has been cautious and non-committal, broadly echoing government rhetoric emphasising uncertainty. While there has been some adjustment in positioning, there is still no strong conviction signal in flows.

For now, USDJPY appears likely to remain broadly range-bound in the 158–160 area, absent a clearer macro catalyst.

CHF

The Swiss franc would ordinarily screen well in an environment defined by elevated geopolitical uncertainty and fading confidence in US policy consistency. However, SNB resistance to excessive franc strength remains an important limiting factor. With policymakers having already shown discomfort with CHF appreciation this year—and likely having intervened previously—the franc is not the highest-conviction defensive preference at this stage.

That said, the broader narrative of portfolio reallocation away from the dollar remains supportive for CHF on a medium-term view, especially if confidence in the US policy framework continues to erode. Recent flow patterns suggest real money and hedge fund franc supply has been met by systematic demand, helping absorb selling pressure.

AUD / NZD / SEK / NOK

The high-beta and cyclical FX complex remains especially sensitive to shifts in the geopolitical narrative. Friday’s sharp rally in risk sentiment pushed AUD, NZD and SEK higher, while NOK underperformed on the temporary pullback in energy prices. That move was then quickly reversed as weekend events reignited concerns over the Strait and the durability of any ceasefire arrangement.

The key issue for these currencies is whether the market can regain confidence that the US and Iran are moving, however unevenly, toward some form of stabilisation. If that proves to be the case, then the broader macro damage to growth may remain contained, while still-elevated energy prices would continue to support the relative-value trades that have worked well this year.

Within that set, AUD and NOK remain preferred, supported by yield, fiscal credibility, and relative macro resilience. In NOK specifically, recent price action suggests underlying demand remains intact, with NOKSEK finding support near 0.9700 and EURNOK peaking around 11.09 before sentiment turned. The bias remains to buy NOK on dips, while maintaining a reduced AUD long until headline risk becomes less binary.

The next 48 hours are likely to be critical for this part of the G10 complex, given the proximity of ceasefire deadlines and renewed talks.

CAD

In Canada, politics has receded somewhat as a market driver following the Liberal majority, with the result unlikely to materially alter the fiscal outlook. The more immediate focus is the upcoming inflation release.

Consensus expectations are for headline CPI to accelerate to 2.4% in March from 1.8%, largely on the back of higher oil prices, while core inflation is expected to remain near 2.3%. Even so, the broader macro view on Canada remains relatively cautious. Concerns around domestic growth persist, and that leaves CAD vulnerable on the crosses, even if the currency is somewhat cushioned by firmer energy prices.

Recent flow data also point to a softer backdrop, with corporate and hedge fund accounts increasing CAD supply late last week.