Institutional FX Insights: JPMorgan Trading Desk View 13/7/26
JPM G10 FX Daily
EUR / USD: Middle East Noise, But CPI and Fed Speak Matter More
No surprise that most focus will be on the additional strikes over the weekend.
We are moving further away from the ceasefire state, even though Trump maintains that the Strait remains open.
I am not sure where that leaves us in G10.
USD length is now more prevalent.
As we saw last week, EM positioning is much more sensitive as the relaxed “summer of carry” view gets called further into question.
For the USD, I think the more important events this week will be:
Fed speak
June price data, starting with CPI tomorrow
On Fed speak, we have a raft of speakers due before the Fed blackout starts on Saturday.
The market is trying to fit the dots to the voters.
Waller kicks things off after London leaves today.
Warsh’s Humphrey-Hawkins testimony tomorrow will be another key event.
For now, I am broadly neutral USD.
EUR/USD: Still Anchored Around 1.14
There is no change to the EUR view.
EUR/USD is still struggling to get away from 1.1400.
I still have a bearish bias, but would prefer to sell rallies into the 1.15 handle.
Use the 200dma around 1.1650 as the risk point.
On the downside, 1.1340 remains the key support level.
Flow-wise, the impressive SHF EUR selling streak has extended to 13 sessions, while other sectors remain mixed.
Trade bias: Bearish bias, but sell rallies rather than chase lows.
Sell zone: 1.15 handle.
Risk point: 1.1650 200dma.
Key support: 1.1340.
Catalysts: US CPI tomorrow; Fed speak this week.
Flow: SHF EUR selling streak now 13 sessions.
GBP: Long Small EUR/GBP; Burnham Relief Looks Priced
There is little to add to the GBP picture.
We still await more meat on the bones of Burnham’s blueprint and cabinet picks.
I remain of the opinion that the “he is not so bad” impulse is now well in the price.
It makes sense to start looking the other way tactically.
That is especially true if the oil impulse starts to impact gilts more and cause some jitters.
I am long a little EUR/GBP here.
Flows remain mixed across investor types:
SHF extended their GBP buy streak to 12 sessions
DHF extended their GBP sell streak to 6 sessions
Key levels:
EUR/GBP: 0.8470/0.8600
Cable: 1.3325/1.3500
UK GDP data dump is due Thursday.
Trade bias: Long small EUR/GBP.
EUR/GBP range: 0.8470/0.8600.
Cable range: 1.3325/1.3500.
Catalyst: UK GDP Thursday.
Risk: Sterling momentum persists despite valuation and political risks.
JPY: GPIF Signal Could Be Enormous
Interest in the GPIF story ramped up on Friday.
The signalling effect from Katayama should be powerful.
But the potential shift in flows and attitude could be enormous in the bigger picture.
We invested in a mix of USD/JPY downside over the next few months on Friday.
We also saw strong DHF JPY buying in cash and options.
This morning’s headlines poured some cold water on plans to change allocation.
But reading the details, the “people with knowledge” claim there is no immediate plan, while pointing to working within the existing framework to direct more money back home.
That means using the existing 6% deviation bands, etc.
So this is not too much of a disappointment.
It is becoming increasingly clear that Takaichi and Co. are less accepting of JPY and JGB pressure as the government prepares to unveil a new blueprint for the future.
I am long JPY here.
Key USD/JPY levels to watch:
160.50
163.00
All eyes are also on US CPI.
It was this exact print two years ago that saw more opportunistic MoF engagement.
Trade bias: Long JPY / USD/JPY downside.
Key levels: 160.50 and 163.00.
Driver: GPIF/local-asset signal; official discomfort with weak JPY.
Catalyst: US CPI tomorrow.
Risk: No concrete GPIF action and hot CPI push USD/JPY higher.
CHF: Short CHF Reduced; Prefer Buying USD/CHF Near 0.8000
USD/CHF is chopping around in a 0.8050/0.8100 range, led by broader USD gyrations.
We still like being short CHF.
However, we have reduced and would prefer to buy a dip closer to 0.8000 in USD/CHF if seen.
Focus is now on US CPI tomorrow.
We will run just a core long USD/CHF into the print and react to the number on the day.
Flows have been mixed recently:
Real money have been CHF sellers
Hedge funds have been CHF buyers
Trade bias: Short CHF, but reduced.
USD/CHF range: 0.8050/0.8100.
Preferred add level: Near 0.8000.
Catalyst: US CPI tomorrow.
Risk: Softer CPI drags USD/CHF lower.
AUD / NZD: Staying Light Into CPI
There was fresh escalation over the weekend in Iran.
FX has been relatively well contained, but oil prices are up more than 3% since Friday’s close.
We have been close to home in the Antipodeans since moving to the sidelines in AUD/NZD last week.
That leaves us with a token long AUD/USD, which is holding well on the 0.69 handle.
The weekend events do not leave us terribly optimistic on risk in the short term.
Tomorrow’s US CPI will also be pivotal for the USD outlook.
So we are happy to keep positions lighter ahead of the print.
Flows:
Real-money AUD demand was offset by systematics
Systematics extended their NZD buy streak to 6 sessions
Trade bias: Light token long AUD/USD; flat AUD/NZD.
AUD/USD: Holding the 0.69 handle.
Catalyst: US CPI tomorrow.
Risk: Hot CPI and Middle East escalation pressure high beta.
CAD: Bearish CAD, But Neutral Near 1.4200
Canada payrolls on Friday were fairly close to expectations.
They should not move the needle much for the BoC.
USD/CAD has been trading around Middle East headlines.
But the focus now turns to US CPI tomorrow.
We remain bearish CAD and the Canadian economy.
However, we are more neutral up toward 1.4200 in USD/CAD.
So the preference is to buy a dip toward 1.4000.
Trade bias: Bearish CAD medium term; neutral near 1.4200.
Preferred entry: Buy USD/CAD dip toward 1.4000.
Catalyst: US CPI tomorrow.
Risk: Strong oil and stable risk keep CAD supported.
SEK / NOK: Flat After Soft Norway CPI
Norway CPI was softer on Friday.
So we took profit on EUR/NOK shorts after selling above 11.30.
While oil is higher after fresh Middle East strikes, we ultimately think the recent tensions are a fade.
That means we want to be closer to home in NOK.
US CPI is tomorrow as well.
So we are happy to take the cue from there in both NOK and SEK.
At current levels, conviction is not strong in either.
Trade bias: Neutral SEK/NOK after taking EUR/NOK profit.
NOK driver: Higher oil helps, but Middle East tension viewed as fade.
Catalyst: US CPI tomorrow.
Risk: Oil escalation revives NOK outperformance.
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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!