JPM G10 FX Daily

EUR: USD Direction Right, But Price Action Looks Stretched

Yesterday was a strange day in FX.

Looking across asset markets, you would have expected USD demand to dry up:

• Oil continued drifting lower.

• Yields also fell.

• Risk tone was not screaming dollar chase.

Yet the greenback stayed pinned near its highs.

That continues to point to month-end, quarter-end and half-year-end rebalancing needs distorting price action.

I do not disagree with the broad direction of travel this month. But this volume of corporate flow at current levels feels like it is chasing a narrative we have had for a few weeks already.

So from here, as I said yesterday, things feel a little stretched.

I would have no issue upping risk again if July payrolls and CPI ratchet up pressure into the FOMC meeting at the end of the month.

But for now I am happy to be a bit more neutral.

PCE is a little backward-looking to me, but the market will try to react today regardless.

As for tech stocks, I do not even want to talk about them. As per my piece the other day, tech seems to go from best to worst to best again every other day.

Risk: Reduced USD Cash, Keep Optionality

I remain long USD/CHF, although I have reduced all cash given the uptick in positioning and the stretched price action described above.

I am keeping topside for the US data next month.

Shorter term, I do not mind buying cable here.

There is a rough double bottom for the year, and if it holds, GBP should benefit from:

• Carry properties.

• Some political stability for at least a few weeks.

• A calmer USD-demand backdrop.

If cable squeezes, maybe look to sell EUR against GBP on a short-term move above 1.1400 in EUR/USD.

Elsewhere, I am clinging on in ZAR.

I have to admit I trimmed some high ones yesterday because I could not take the pain — idiot — so I hope my sacrifice is a gift to the FX gods.

I have re-sold EUR/HUF at a reasonable level and still have room to add on more pain. At least things feel a little calmer this morning.

EUR/USD: Sell Squeezes Above 1.1400

EUR flow yesterday was still dominated by the corporate sector.

Discretionary accounts got excited on the break of the highlighted Fibonacci level, but there was little staying power once EUR/USD closed back above it.

So from a signalling perspective, the move was not that exciting.

I maintain the current stance.

Given we sat around 1.1600 forever, this move feels enough in the short term.

There are also factors that should provide some support:

• Oil is lower.

• ECB hawkishness is less urgent, but not gone.

• US yields have already moved enough into July data.

Whether EUR can bounce much is more debatable.

The market still has to consider a Fed hike conversation in July if the data corroborates the hawkish dot plot.

So the trading strategy is:

• Do not press fresh shorts here.

• Sell any mini positioning squeeze back above 1.1400.

• Keep broader USD length elsewhere.

I had reduced post-Fed EUR shorts a bit prematurely in front of 1.1400 last week, while maintaining dollar length elsewhere.

Trade bias: Neutral-to-bearish EUR/USD; sell squeezes.
Key level: 1.1400.
Strategy: Sell mini positioning squeeze back above 1.1400.
Risk: July payrolls/CPI validate the Fed dots and force renewed downside.
Near-term issue: Month/quarter/half-year-end flows distort price.

GBP: Positive Burnham Noises, But EUR/GBP Support Holds

Not much has changed since I last wrote.

The excitement for USD into month-end, quarter-end and half-year-end is palpable.

Given recent rebalancing periods, and given how stretched many technical signals are after a prolonged rangebound low-vol period, it is hard not to expect movement.

I am still sticking with reduced USD longs, but my bias is to reduce further over the next week.

NFP is the next big catalyst for me.

PCE feels like old news with oil $50 off the highs.

Flows and Politics: GBP Story Better, But Not Enough Yet

We saw strong discretionary hedge fund sterling buying yesterday:

• 1.75z

• 4-day buying streak

This was mostly against EUR as EUR/GBP challenged the important 0.8600/10 support level.

Unfortunately, that level held like a rock.

Taking a step back, the political noises are pretty positive for Burnham:

• Sensible people around him.

• Sensible policy messaging.

• Lower odds of Miliband as Chancellor.

Headlines such as “Unions combine to try to stop Ed Miliband becoming Chancellor” are helping.

Current Polymarket odds:

• Streeting: 41%

• Cooper: 20%

• Miliband: 17%

Given the optimism, flow, and stubborn cross price action, I have tactically shelved GBP longs here.

But I would re-engage on a break lower in EUR/GBP.

Shorter term, I do not mind buying cable if the rough year-to-date double bottom holds.

Trade bias: Tactically shelved GBP longs; re-engage on EUR/GBP break.
EUR/GBP key support: 0.8600/10.
Cable: Buy tactically if double-bottom area holds.
Politics: Burnham path improving; Miliband odds falling.
Risk: EUR/GBP support keeps holding and USD demand resumes.

JPY: Modestly Long JPY, Waiting for 162

USD/JPY is creeping higher again into a month-end period expected to be USD-positive.

Will we finally see 162 print?

I expect so.

And I also expect there to be a reaction from MoF, as I have been writing.

Tamura was on the wires overnight — a hawk being hawkish.

Post month-end, attention could turn to the GPIF annual report, expected 3 July.

I am modestly long JPY here and on high alert.

Net flows yesterday were minimal.

Trade bias: Modestly long JPY.
USD/JPY trigger: 162.
MoF: Reaction expected if/when 162 trades.
Other catalyst: GPIF annual report expected 3 July.
Risk: Month-end USD demand overwhelms intervention fears.

CHF: USD/CHF Holding Above 0.8100 Is Encouraging

No change in view.

I am still bullish USD/CHF.

It is encouraging that USD/CHF is holding above 0.8100, despite the desk seeing decent CHF demand yesterday from both:

• Systematic accounts

• Hedge funds

Focus today is core PCE.

A strong print should reinforce the stronger-dollar narrative.

But next week’s payrolls will ultimately be the make-or-break event.

Trade bias: Long USD/CHF, but reduced cash exposure.
Key level: Holding above 0.8100.
Catalysts: Core PCE today; payrolls next week.
Risk: Positioning has risen and USD looks stretched near term.

AUD / NZD: Cut AUD/NZD Longs, Watching AUDUSD Technicals

With the AUD long argument becoming a little less compelling — see yesterday’s note for details — I cut the last of my AUD/NZD longs yesterday.

The failure of AUD/USD to rally as USD weakened late yesterday was a small concern.

And with AUD/NZD failing to seriously test the 2026 high, I have moved to the sidelines.

Overnight data was marginally supportive for AUD:

• Unemployment rate fell from 4.5% to 4.4%

• Household spending rose

But the impact was limited.

AUDUSD: Technical Setup Starting to Look Interesting

After a 5.5% fall, RSI is in oversold territory.

AUD/USD is approaching the 200dma near 0.6858.

That makes the technical setup interesting.

But the next few days are important for short-term momentum:

• US PCE this afternoon

• Potential US corporate USD demand tomorrow

• Month/quarter/half-year-end rebalancing flows

For now, I am on the sidelines.

Trade bias: Flat AUD/NZD.
AUD/USD support: 200dma around 0.6858.
Setup: Oversold after 5.5% fall.
Risk: Month-end USD demand drives another leg lower.

CAD: Stay Short, USD/CAD Through 1.4200

USD/CAD continues to trend higher.

The pair easily took the 1.4200 handle this week as:

• Oil prices moved lower.

• USD stayed on the front foot.

I still think Canadian fundamentals are weak.

With US-Iran de-escalation driving a sharp selloff in oil, CAD should remain a major underperformer.

Stay short CAD.

Trade bias: Short CAD / long USD/CAD.
Key level: USD/CAD above 1.4200.
Drivers: Weak Canada, lower oil, firm USD.
Risk: Oil rebound or softer US data squeezes USD/CAD longs.

SEK / NOK: Cut NOK/SEK, Looking to Reset NOK Longs Later

Rate differentials still favour long NOK/SEK.

In a recent update, I noted that the Riksbank minutes showed no urgency to hike rates, reinforcing this divergence.

But oil now trades at the closing level seen before the US/Iran conflict started.

With opposing arguments in play, and with lower US yields yesterday also seeing some USD/SEK underperformance, it seemed prudent to move to the sidelines.

From a relative-value perspective, the move in rates over the past two weeks implies fair value around 1.0100 for NOK/SEK.

But when Brent was last at current levels, NOK/SEK was around 0.9500.

The view that SEK would underperform post-Fed was sound. In hindsight, USD/SEK was probably the obvious trade, though I was already long USD elsewhere.

But with the long NOK/SEK argument now less compelling, I cut the last of the longs yesterday, even though the move in oil looks a little overdone.

I understand the conflict has triggered a reassessment of energy needs and could accelerate the energy transition.

But there is still a large stock rebuild to come, which should increase demand. Cushing is at its lowest level in five years.

Still, you cannot argue with price action.

NOK is starting to feel the full force of the move in energy markets.

For now I am sidelined.

If lower energy prices feed through to a better growth outlook, NOK can still benefit from:

• Procyclical backdrop.

• High-yielding status.

Ideally, I would like to see EUR/NOK move above 11.30 to reset.

Important resistance levels:

• 11.35

• 11.3850

• 200dma zone

With EUR/NOK almost 5% off the lows, I am looking for opportunities to reset NOK longs.

Trade bias: Flat NOK/SEK; looking to reset NOK longs.
NOK/SEK rates FV: Around 1.0100.
Oil comparison: Current Brent historically associated with NOK/SEK near 0.9500.
EUR/NOK reset zone: Above 11.30, with 11.35/11.3850 important.
Risk: Oil keeps falling and NOK underperforms further.