Institutional FX Insights:JPMorgan Trading Desk Views 9/4/26
Macro / overnight
- Ceasefire optimism is wobbling but not broken.
- After the Asia USD selloff, it was notable that the USD couldn’t extend materially in London and ended up broadly unchanged.
- That price action is mildly encouraging for the medium-term USD debasement / rotation / hedging narrative, but the desk is not ready to fully re-engage while headlines remain contradictory.
- The market is now stuck between:
- tentative optimism that both sides want some form of resolution
- and the reality that the bar for any durable deal is still very high
- With weekend talks approaching, gap risk remains very real.
---
## Market tone
- Broad tone is cautious tactical USD shorts, but in small size.
- This is not full conviction risk-on.
- Key idea:
- if there is eventual resolution, the pre-existing USD debasement / asset reallocation / hedging diversification theme should come back strongly
- but until then, positions need to be nimble and sized for headline risk
---
## FX themes by currency
### EUR
- EUR remains constructive, but the desk wants a stronger technical confirmation before getting more excited.
- Key area is the 1.1640 / 1.1671 retracement zone, with the more important technical hurdle the 1.1673 / 1.1693 cluster of the 50d / 100d / 200d moving averages.
- A 2-day close above that zone would be a more meaningful bullish signal for EURUSD.
- Broader read remains that once there is a cleaner resolution, EUR should benefit from the USD credibility / diversification theme.
- Takeaway: constructive EUR view, but still more tactical than aggressive.
### AUD
- AUD is the preferred USD short expression right now.
- The author is currently short USD primarily against AUD, though not in size.
- The logic is:
- AUD gives exposure to a softer-USD / eventual resolution view
- while also capturing the idea that commodity-friendly, high-beta currencies can perform if the environment stabilizes
- For the USD to hold its recent rebound, AUDUSD should stay above the 0.7013 / 0.7040 retracement zone.
- Takeaway: AUD is the favorite tactical vehicle for near-term USD downside.
### NZD
- NZD was the second-best G10 performer yesterday.
- Support came from:
- a more hawkish-than-expected RBNZ
- relief rally dynamics, given NZD had been one of the most punished currencies during the conflict
- The desk still isn’t naturally keen to chase NZD, but would become more constructive if it can post a 2-day close above 0.5850, where the 100d and 200d moving averages sit.
- Takeaway: NZD is improving technically and fundamentally, but conviction remains conditional on the chart.
### GBP
- Yesterday saw very heavy USD selling participation:
- DHF: 4z
- SHF: 2z
- RM: 1z
- But nerves have crept back in because of confusion around whether Lebanon is actually covered by the ceasefire.
- Even so, the bias remains to run some tactical USD shorts, with the author explicitly saying EUR and high-beta commodity currencies should be part of that basket.
- On GBP specifically:
- preference remains to build EURGBP longs
- especially in the 0.8680 / 0.8700 zone
- with 0.8750 as resistance
- In cable:
- 1.3485 / 1.3500 remains the key topside cap
- 1.3350 should be short-term support
- Sterling was not a major flow participant yesterday on a net basis.
- Takeaway: GBP can benefit from softer USD, but the cleaner trade remains long EURGBP.
### JPY
- JPY remains frustratingly rangebound; if you simply traded 158 / 160 in USDJPY, you did well.
- JPY was the favorite hedge fund buy yesterday, likely reflecting rates moves, but broader participation was lacking.
- Local corporates faded the move, which is at least mildly informative.
- The desk is happy to stay sidelined, especially after a difficult Q1.
- Base case is JPY continues to move with the broader USD while cross-JPY grinds higher.
- Takeaway: no strong edge; JPY remains more of a tactical range trade than a conviction macro view.
### CHF
- Despite large FX moves elsewhere, EURCHF stayed relatively stable.
- Flows were mixed:
- real money sold CHF
- systematics bought CHF
- The desk had been looking to buy dips in EURCHF, but with the ceasefire looking fragile and risk already on elsewhere, appetite to get short CHF is fading.
- Takeaway: back to neutral / sidelined on CHF.
### CAD
- The CAD view has shifted.
- Medium term, the desk had been bearish CAD because of:
- weak domestic growth
- USMCA negotiation risk
- But if there is a more durable geopolitical resolution, CAD could benefit from the asset reallocation / anti-USD policy uncertainty theme.
- Importantly, local real money accounts were buying CAD yesterday.
- On that basis, the desk has now flipped modestly long CAD.
- Takeaway: near-term CAD bias has turned constructive, driven by flow and potential post-resolution reallocation dynamics.
---
## Positioning / trade color
- Running modest USD shorts
- Preferred expression: short USD vs AUD
- Still constructive on EUR
- Added to EURGBP longs
- Flipped modestly long CAD
- Staying sidelined on JPY and CHF
- Overall sizing remains small due to weekend headline risk
---
## Flows
- Heavy USD selling yesterday
- DHF led with 4z
- SHF added 2z
- RM added 1z
- In GBP, flows were relatively muted on a net basis
- In JPY, hedge funds were buyers, but local corporates faded
- In CHF, RM sold CHF while systematics bought it
- In CAD, local RM demand showed up and was important enough to shift the desk view modestly bullish
---
## Key levels to watch
- **AUDUSD:** 0.7013 / 0.7040
- **EURUSD retracement support:** 1.1640 / 1.1671
- **EURUSD key MA cluster:** 1.1673 / 1.1693
- **NZDUSD key technical level:** 0.5850
- **EURGBP build zone:** 0.8680 / 0.8700
- **EURGBP resistance:** 0.8750
- **GBPUSD resistance:** 1.3485 / 1.3500
- **GBPUSD support:** 1.3350
- **USDJPY range:** 158 / 160
---
## What clients should hear this morning
- The desk still likes being tactically short USD, but only in controlled size.
- AUD is the preferred expression, with EUR still constructive and NZD improving.
- EURGBP longs remain a favored relative-value trade.
- The biggest change this morning is CAD, where the desk has flipped modestly long on the back of RM demand and the possibility that a cleaner resolution reactivates the reallocation theme.
- JPY and CHF are both “nothing to do” for now.
---
## Bottom line
Morning call bias remains modestly USD-negative, expressed mainly through AUD and selectively EUR, while EURGBP longs are being added and CAD has turned tactically constructive. But this is still a small-size, headline-sensitive setup with real weekend gap risk.
If you want, I can also turn this into:
- a 30-second desk script
- a one-paragraph client email
- a bias / levels / flow table
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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!