JPM G10 FX

EUR

One of the more disorderly month-end sessions in recent memory played out yesterday. As I suggested previously, expectations for dollar buying may have run too far ahead. The dollar had already been bid in prior sessions, and the reversal appeared to begin early in the day—even before Trump’s comments.

The bigger-picture question remains whether the worst of the Middle East disruption is behind us. If anyone can confidently get inside Trump’s head, I would love to hear it. My view is that even if a “victory” is declared and the U.S. walks away without any real influence over the Strait, we are not simply returning to the pre-crisis growth optimism of January. For the dollar in particular—and this is one reason I have repeatedly resisted the bullish USD consensus—we may be left with a geopolitical and credibility backdrop that is objectively worse than before, with the rest of the world forced to absorb much of the fallout. In a world where U.S. policy credibility was already under pressure, the rotation / diversification away from U.S. assets argument may re-emerge.

That said, Trump’s announcement tonight could be anything. With a long holiday weekend ahead and payrolls approaching, this is hardly the environment to be all-in on any view.

I remain short USD/JPY, though I trimmed slightly this morning and would look to sell rallies toward 159. The Tankan was decent overnight and is another pillar supporting the case for eventual BoJ tightening—perhaps the worst is over. I also took back my remaining GBP short on yesterday afternoon’s random cable move, but would look to re-sell on a move into the 1.33s. I have also taken some profit in USD/CAD and would look to buy again in the mid-1.38s. I have also exited EUR/HUF for now, hoping for another opportunity to sell rallies ahead of April 12.

The euro has climbed out of the hole. The market had clearly become somewhat short EUR, helped by expectations of further quarter-end dollar demand. Just as I did not want to chase it lower, it is probably not wise to chase it higher from here either. It is too early to say we are out of the woods, but short covering is continuing this morning. If you are bearish EUR, the cleaner setup is probably to fade a move into the 1.16 handle, using the 100-day and 200-day moving averages at 1.1678 / 1.1691 as risk parameters. Personally, I remain more interested in how resilient EUR has been relative to what rates, growth, and fair-value models would have implied.

GBP

Yesterday’s rebalancing session was exceptionally large, and sterling was hit hard late in London trading. Our flow trend also remained consistent, with real money accounts selling GBP aggressively (>3z), extending that streak to six sessions. Was it all month-end rebalancing? Time will tell, but it is notable that DHF accounts continued to fade the move for a third straight session.

Regardless of tonight’s Trump speech, it is hard to be constructive on sterling here, especially as the UK continues to be criticized by the U.S. for insufficient defense spending—something it can ill afford politically or fiscally.

EUR/GBP has now broken clearly through the 0.87 resistance level, though given the obvious month-end distortion, I have tactically taken profit and would look to re-enter longs around 0.87 in coming sessions.

If you do not buy into the relief-rally narrative, then selling cable into 1.3300 / 1.3320 makes a lot of sense.

JPY

Markets remain messy, with contradictory headlines colliding with yesterday’s explosive rebalancing flows. The overall tilt still leans toward relief, but in wartime it is almost impossible to take Trump at face value with any confidence.

USD/JPY saw a meaningful release higher overnight alongside a very well-bid fixed income market, though the rebound off the lows following the Iran parliament headline has been quite aggressive. I still do not think this is a market that rewards taking oversized directional bets, but the price action in fixed income is increasingly compelling, even allowing for month-end distortions.

The Tankan was solid overnight and should support the BoJ narrative, though April pricing remains largely unchanged at around 18bp.

Today’s key U.S. data:

• ADP employment

• retail sales

• ISM Manufacturing PMI

For now, I would look to sell USD/JPY into 159.20 / 159.30. The broader range remains 158 to 160.

CHF

Yesterday’s month-end / quarter-end session was also wild in CHF, with heavy outright selling going through. We did not fully capture that move, though we did see notable hedge fund CHF demand, presumably from accounts looking to fade the dislocation.

This morning, CHF is trading back lower, continuing to largely ignore the more risk-on tone generated by the latest extension of the TACO dynamic. I also faded EUR/CHF yesterday, but have since taken that position off, as the cross still appears magnetized toward 0.9200.

Ultimately, I still have limited edge on CHF here and remain unconvinced by the broader risk-on interpretation. If the U.S. ends the Iran war while the Strait of Hormuz remains shut, that is hardly an obviously positive outcome for either growth or inflation.

The focus now shifts to Swiss inflation data tomorrow. Also worth noting: PMI surprised to the upside this morning, though it should have limited direct FX impact.

AUD / NZD / SEK / NOK

Yesterday’s NOK call did not play out as hoped, but as I wrote at the time, the goal was less about perfectly timing month-end flows and more about identifying when currencies become dislocated from fundamentals, creating opportunities to fade exaggerated moves.

With that in mind, I sold EUR/AUD, which had simply moved too high relative to the terms of trade and was also approaching an important Fibonacci resistance level at 1.6905—the wave 3 correction when measured from the start of the move back in April. Yes, I know everyone loves the technicals.

Back to Norway, which has faced two headwinds over the past 24 hours:

1. Norges Bank daily FX purchases were reduced from NOK 724m to NOK 174m, which is psychologically NOK-negative.

2. Comments from both Trump and the Iranian president helped push oil lower, which in turn weighed on NOK.

Trump suggested the U.S. could leave Iran within 2–3 weeks even if the Strait has not reopened, while Iran’s president reportedly said that the country has the will to end the conflict if essential conditions are met.

While both factors may pressure NOK in the short term, I would remind readers that lower FX purchases reflect a position of fiscal strength, thanks to stronger tax revenues—even if investors do not read it that way. And even if energy prices fall on some kind of resolution, they would likely remain well above pre-conflict levels, which should continue to support Norway’s terms of trade.

So while I cannot rule out further NOK weakness, I still think moves toward 11.30 / 11.35 should attract selling interest in EUR/NOK.

On SEK, EUR/SEK has fallen roughly 1% from yesterday’s highs, as one would expect with some recovery in risk sentiment. Back in December, I recommended selling / adding to EUR/SEK shorts near 11.00, and with the cross again approaching that area, I have done so once more.

Full disclosure: I had previously reduced the position and already regret that decision. If we really are moving toward more constructive dialogue—though I remain skeptical—then we may already have seen the highs in the cross. That said, as I write, Iran is saying that no negotiations have taken place, so the headline risk remains very much alive.

Almost two weeks ago, I wrote that this situation should not be seen as positive for either the U.S. or the USD, and that the USD debasement / diversification argument would likely re-emerge once the conflict begins to resolve, whatever form that takes. I am not saying we are fully there yet, but I am increasingly asking what would make me revisit that view.

CAD

Canadian GDP printed slightly above expectations yesterday, but the loonie still underperformed on the crosses. The desk continues to see strong CAD supply, mainly from systematic accounts, which have now been sellers for nine consecutive sessions.

I have been short CAD for some time, and I still think the currency underperforms—especially on the crosses—even if we get a near-term resolution to the Iran conflict.

So for now, I remain short CAD.