Institutional FX Insights: JPMorgan Trading Desk Views 10/2/26
USD — Selloff regained traction
The dollar was offered steadily all day, less about a single cross-asset impulse and more a rebuilding of conviction after last week’s washout. The drivers were: the market being wrong-footed by the post-election USDJPY reaction, headlines around Chinese bank Treasury holdings, and Hassett’s comments ahead of the employment report. The main caveat: “weak” jobs may mean different things to Hassett versus the market, especially with the whisper/official gap widening. Net: USD selloff welcome, but data interpretation risk is high into ADP/ECI/Retail Sales and NFP.
EUR — Bounce surprised; don’t marry it near 1.20
The euro rebound was easier than expected given the sense the market had accepted highs and reverted to using EUR as a funder. There was selling interest around 1.18 previously, so a bounce was always possible, but flows yesterday were largely nondescript and there wasn’t much appetite to fade it. Cash EUR longs were taken off just sub-1.19; topside optionality remains “back from the dead.” Given sensitivity around 1.20, even with soft US data the market may struggle to break materially higher—bias is to exit remaining topside into strength and assume the broader range holds.
JPY — Stay short USDJPY; setup improving
Remain short USDJPY. The price action is notable: if fiscal isn’t funded via more bond issuance, prevailing currency assumptions may be off—especially if this becomes a broader “buy Japan” moment on the back of political stability and potential local asset reallocation themes. Technically, USDJPY printed an outside day and closed into the Ichimoku cloud and below the 50-day (~156.3). Levels to watch: cloud bottom ~154.7 and 100-day ~154.5. Cross-yen remains elevated, so the USDJPY short is preferred versus expressing JPY strength via crosses.
GBP — Political risk premium persists; buy EURGBP dips
UK headlines (Streeeting / Rayner backing Starmer) read as “not ready yet,” which should cool immediate noise, but the political risk premium in sterling likely persists. Preferred expression is buying EURGBP dips toward 0.8670/80. Tech: cable support 1.3620/30 with 1.3725 above; EURGBP 50d ~0.8707 and 100d ~0.8729, with a triple-top zone 0.8740/45 since year start. Flows were minimal; near-term price action should be US-data led.
CHF — Outperforming, but carry makes it a second-choice USD short
CHF was a standout: EURCHF pushed lower and CHFJPY ticked back up. Demand is getting harder to ignore, but with poor carry there are “better” USD shorts elsewhere. As EURCHF breaks last month’s lows, watch SNB sensitivity—likely more about speed than level. Staying flat CHF for now.
AUD — Trimmed into 0.7100; still constructive, wants the break
AUD outperformed again and tested 0.7100 for the second time this year. Without a clean break, risk is a double top—so trimming made sense—but the underlying long case is unchanged (domestic resilience, hawkish RBA, rate differentials, fiscal story, USDCNH sub-7.00, debasement narrative, hedging demand). Notably, AUD held up despite persistent selling from parts of the franchise; if US data is soft, bias is to add. Crosses remain attractive to remove USD event risk.
CAD — Flow fighting the macro
USDCAD shorts have been painful: meaningful local real-money USD selling kept CAD bid. Macro still argues CAD underperforms “better stories,” but if this flow dynamic persists it’s a position you may need to size for pain and time.
NOK/SEK — Long NOKSEK; inflation divergence is the catalyst
Flipped long NOKSEK on Norway inflation strength versus Sweden and Riksbank pushback on SEK. Today’s Norway inflation is key (market core YoY ~3.0 vs CB 2.9). Plan is to stay flexible around the print, but bias remains NOK over SEK.
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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!