JPM G10 FX Daily

## EUR: Trump Whiplash, ECB Ambiguity, EUR Still Can’t Break

Textbook Trump.

Talk hard, then wait for the red headline: “we had a good chat.”

There was some noise around the early afternoon headlines, but not much chasing. The market increasingly looks bored of the cycle. The positive/de-escalation side got more of a reaction later in the day, with discretionary accounts selling a lot of dollars in the evening.

Whether the Iranians are fully on board remains to be seen. For now, this is clearly a can-kick with little initially agreed, apart from a Strait reopening that already looked somewhat priced with oil where it was.

Still, the market can move on for a bit.

Two things can initially constrain the dollar:

1. If this is only a 60-day ceasefire extension, markets cannot price zero probability that something goes wrong during that period.

2. Given the run of strong US data, there should be a floor under how far yields can fall into next week’s Warsh-led Fed meeting.

The news suited the book.

EM longs outperformed CHF shorts by a wide margin. I have reduced MXN entirely given the above, but only trimmed ZAR. If gold can base here, that helps explain part of ZAR’s relative underperformance and leaves more room, especially with less positioning.

I had already reduced CHF earlier in the week, but still think the short CHF theme makes sense longer term, so I am happy to keep a decent core.

If we get an MOU signing and Warsh is not a mega-hawk, maybe we enter a summer lull where:

- Carry reasserts.

- Vol stays low.

- Large directional moves become harder to find.

But let’s get through next week first.

I do not mind scaling into a EUR/NOK short at these levels. Aside from the oil whipsaw, the yield story still supports NOK on dips.

### ECB: Forecasts Hawkish, Lagarde Sanguine

The ECB message from the forecasts was hawkish. Core inflation was still above target at the end of the forecast horizon, with three hikes already assumed.

But Lagarde was more sanguine and gave little away, which is par for the course these days.

Later source stories gave conflicting signals around another move at the July meeting. Pricing remains a coin toss and is basically unchanged from before the meeting.

EUR got no real uplift during the press conference, confirming the strategists’ view. It was only the usual Middle East noise that came to the single currency’s rescue.

That triggered chasing from both discretionary and systematic accounts. We were a decent EUR buyer after the headlines, though obviously not far from current levels.

I am somewhat surprised EUR could not extend further. That should embolden the bears.

I thought I might be able to enter a short above 1.16, but alas no.

For now, I would rather run risk elsewhere. If you can get short on a 1.16 handle, with a chop/stop above the moving-average cluster around 1.1680/90, then I would engage.

Trade bias: Prefer risk elsewhere; sell EUR rallies if offered.

**EUR/USD short zone:** 1.1600+.

Stop/chop area: Above 1.1680/90.

ECB: Forecasts hawkish, Lagarde neutral/sanguine.

USD: Reduced length, but not chasing lower into Warsh.

Risk: Signed MOU + non-hawkish Warsh extends USD softness.

---

## GBP: EUR/GBP Still a Patience Trade

More classic Trump whiplash: escalation turned to de-escalation.

But stepping back, not much has really changed. The MOU is ready to be signed, but it is not final and has not been signed by Khamenei.

Even if that hurdle is cleared, it is only a 60-day ceasefire while negotiations continue. With oil around $85, how much more relief can realistically be priced?

I am happy to have reduced USD length, but I do not want to reduce further ahead of Warsh next week.

Interestingly, there was very little USD buying in our franchise during the escalation, but a significant wave of USD selling after the TACO tweet:

- DHF sold USD around 2z

- SHF sold USD around 1z

So the market is a little cleaner here.

UK data this morning was broadly in line with expectations. The media was focused on UK defence minister resignations yesterday, but there is not much in that beyond the obvious: Starmer’s goose looks cooked.

I found the ECB a touch hawkish on the policy-horizon core inflation projections, which were 2.2% and predicated on what the market already had priced.

That saw me top up EUR/GBP a little.

I am happy to keep running longs.

Levels:

- EUR/GBP risk point: 0.8600/10

- Cable range: 1.3300/1.3480

- Cable 200dma: 1.34195

Trade bias: Long EUR/GBP.

Added: Topped up after hawkish ECB core inflation projection.

**Risk point:** 0.8600/10.

**Cable:** 1.3300/1.3480, 200dma 1.34195.

Risk: EUR disappointment or GBP resilience breaks the lower end.

---

## JPY: Grind Higher Continues, Still No Position

USD/JPY has already recovered 85 pips of the big figure lost after de-escalation headlines.

For a minute, I thought MoF might put on their opportunistic hat last night. But intervening around Trump tweets would be a dangerous game to start playing.

SHF were big JPY buyers yesterday, around 2z, so it is no surprise to see JPY as their top sold currency so far today.

The glacial net progress in USD/JPY feels destined to continue into Warsh next week.

I am staying sidelined in JPY.

Levels:

- 160.725

- 162

A faster move through 162 would raise the risk of bold MoF action materially.

Trade bias: Sidelined.

USD/JPY: Slow grind higher continues.

**Watch:** 160.725, then 162.

MoF: Intervention around tweet-driven moves would be risky.

Risk: Warsh hawkishness pushes USD/JPY disorderly higher.

---

## CHF: Stay Short Into the Population-Cap Vote

TACO Thursday caused a sharp USD reversal and took USD/CHF back below 0.8000 as Trump called off the strikes.

I am out of USD/CHF longs and focused on EUR/CHF and AUD/CHF, though the latter has been disappointing.

Encouragingly, EUR/CHF has remained above 0.9200 despite last night’s risk-on headlines.

We also continue to see systematic CHF outflows, with systematics now on a nine-day CHF selling streak.

Focus turns to Sunday’s vote on capping the population at 10 million.

Polymarket odds of the cap passing have moved from 40% to 22%. However, a poll taken at the end of May showed the vote much closer:

- 51% opposed

- 45% supportive

If passed, the vote aims to keep the population below 10 million by 2050. Forecasts suggest the 10m mark could be reached between 2030 and 2035 under higher-end projections.

The growth implications would be negative. It could:

- Cause labour/supply shortages.

- Hit the industrial sector, which accounts for more than 20% of output.

- Strain ties with the EU.

- Potentially end freedom of movement.

- Trigger guillotine clauses that terminate other EU agreements.

Base case: it does not pass.

But the vote remains tight, and there is not much market focus on it. So I am happy to stay short CHF into the weekend.

Trade bias: Short CHF.

Current expressions: Long EUR/CHF and AUD/CHF; out of USD/CHF.

EUR/CHF: Holding above 0.9200 is constructive.

Vote risk: Population cap Sunday; base case fail, but CHF-negative if passed.

Flow: Systematics selling CHF for nine straight sessions.

Risk: Severe risk-off revives CHF haven demand.

---

## AUD / NZD / CAD: Hold Cross-Scenario Trades

Trump walked back earlier comments about hitting Iran hard and is now saying a deal is close to being signed.

At this point, it is hard to be surprised by any of these twists.

I am not looking to chase the market in either direction.

Instead, I want positions that can work across multiple scenarios:

- Short CAD

- Long higher-beta EM FX such as MXN and ZAR

- Hold AUD longs

The CAD short rationale remains the same as previously discussed: weak domestic growth, limited BoC upside and a poor medium-term backdrop.

AUD has rebounded nicely from yesterday’s lows, even though the desk has seen significant AUD supply from real-money accounts.

That said, I am not sure how much further the USD can sell off into the Fed unless we get an actual signed deal in the next couple of days.

So caution still makes sense.

Trade bias: Short CAD versus selected high-beta EM; hold AUD longs.

USD: Not chasing lower without signed deal.

AUD: Rebounded despite RM supply.

CAD: Medium-term bearish view intact.

Risk: No signed deal + hawkish Warsh reverses risk appetite.

---

## SEK / NOK: Added a Little EUR/NOK Short Above 11.00

All in all, not a great day for the NOK long recently initiated.

The negatives:

- Poor RNS survey.

- Trump TACO took oil below $90.

The positives:

- Higher wage pressures should keep carry intact.

- Norwegian inflation is firmer.

- EUR/NOK above 11.00 still feels too high.

- Recent growth weakness can be partly attributed to the Middle East conflict.

Given that, we added a little EUR/NOK short above the spike.

Reassess around 11.08/09.

SEK, meanwhile, has found support from Trump calling off the strikes.

Before that, however, the backdrop looked bearish for SEK:

- Hawkish ECB.

- Data showing equity rotation from domestic to foreign stocks.

- SEK’s role as a funder.

That said, it is hard to go against risk-on sentiment today, so I am staying on the sidelines in SEK.

NOK bias: Modestly long via EUR/NOK shorts.

Added: Small EUR/NOK short above 11.00.

**Reassess:** 11.08/09.

Support: Inflation and carry.

SEK: Bearish backdrop, but sidelined due to risk-on sentiment.

Risk: Oil stays heavy and EUR/NOK squeezes higher.