Institutional FX Insights: JPMorgan Trading Desk Views 17/3/26
Stay tactical, selective, and relatively defensive in G10 rather than run large conviction trades off one-day swings. The main macro variable is still oil and the Strait of Hormuz. If there is no real geopolitical off-ramp, the bias remains toward owning USD selectively and being cautious on pro-risk FX rallies.
On EUR, the desk has tactically re-shorted the bounce. The key near-term level is the 1.1520 to 1.1530 area, which held as support last week and should now act as initial resistance on this rally. That implies a clean near-term framework: selling strength into that zone makes sense, but with a tight leash because the geopolitical backdrop can abruptly flip sentiment. More broadly, the desk’s downgraded growth and higher inflation outlook leaves the euro without a compelling bullish macro story if the conflict drags on. Lagarde’s comments later in the week are important because ECB discomfort with higher energy and inflation risk may keep the messaging hawkish even if the growth backdrop worsens.
On GBP, the bias remains to sell rallies rather than chase weakness after the move. The desk is looking to sell cable toward 1.34, while expecting 1.3250 to 1.3260 to provide some support and 1.3340 to act as an intermediate level. In EURGBP, they think 0.86 to 0.87 should hold for now. The near-term catalyst is UK labor-force or data releases later in the week; weak data could make GBP shorts more compelling and likely restart more meaningful negative flow trends.
On JPY, the desk still prefers being modestly long, but patience is thinning. The BOJ meeting and especially Ueda’s press conference are crucial because the market is focused on the 160 question in USDJPY and whether Japanese officials tolerate further weakness. The key technical support cited is 157.90 to 158.00, while in EURJPY the 100-day moving average near 182.26 matters. The implication is that yen longs still make sense as a cautious macro hedge, but sizing should stay controlled because intervention may be less effective than in prior episodes if the market is not as structurally short yen as before.
On CHF, the note is effectively neutral. EURCHF has moved back toward the top of its recent 0.9020 to 0.9055 range as risk sentiment improved, but the strategist does not see a strong trade there and prefers to stay flat into the SNB. That means CHF is not a high-conviction expression right now unless broader risk deteriorates sharply again.
On AUD, the tone is notably more constructive. The RBA hiked as expected, but the bigger takeaway is that Australia still offers a strong combination of terms of trade, a relatively hawkish central bank, and fiscal support. Even though the vote split was narrower than some expected, the meeting reinforced the broader bullish case. The desk continues to prefer AUD on the crosses, especially once market conditions calm down. So while geopolitical risk may create noise near term, AUD remains one of the clearer medium-term longs in G10.
On CAD, the desk remains bearish despite higher oil. The reason is that softer inflation and weaker payrolls reduce the chance of further Bank of Canada tightening, and that macro policy signal is expected to outweigh the usual commodity support from crude. The preferred way to express this appears to be CAD shorts versus AUD longs, which aligns with the stronger structural AUD view. Confidence is still described as low, so this is a cautious rather than aggressive trade.
On Scandinavia, the takeaway is that long NOK versus SEK remains preferred. NOK continues to benefit from the terms-of-trade support associated with higher energy prices, and Norway’s domestic macro backdrop also looks firmer, with no Norges Bank cut expected this year according to the quarterly trends report. SEK may bounce on relief rallies, but NOK remains the better structural expression while the oil/geopolitical backdrop stays unresolved.
The trade map from this note is: stay tactically constructive on USD, favor JPY and AUD as the more attractive G10 longs, remain cautious to bearish on EUR, GBP, and CAD, and keep long NOK versus SEK as a preferred cross expression. The biggest warning is that conviction should stay moderate because the entire macro regime is still hostage to oil and Middle East headlines. Until there is real de-escalation and normal traffic through the Strait, rallies in risk FX are more likely to be sold than trusted.
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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!