Institutional FX Insights: JPMorgan Trading Desk Views 22/1/26
Macro backdrop: Trump de-escalation / NATO “framework” removes the Feb 1 EU tariff threat; risk sentiment improves, equities and cyclical FX higher.
EUR: EURUSD stabilized as position liquidation slowed after Trump “TACO moment”; also EUR supported by SCOTUS tone leaning toward Lisa Cook (reduced perceived Fed-independence shock risk).
AUD: Staying long AUD; added after strong Australian employment. Market now near a 50/50 price for an RBA hike in Feb. Next week’s Q4 CPI is the key event risk for AUD; spot above 0.6800 (highest since Oct 2024) makes it more sensitive to a CPI miss.
NZD: Long NZD but smaller conviction than AUD; treated as secondary cyclical/risk expression.
Canada/USMCA: Reminder that Canada likely gets targeted again into USMCA renegotiations; Trump jab at Carney reinforces USD/CAD headline risk.
GBP: Tariff de-escalation is supportive for sterling, but UK-US “special relationship” not a reliable shield. EURGBP exposure reduced; holding only marginal core, with plan to abandon if EURGBP closes back below 0.87 and/or PMIs are robust. Spot levels: 0.87 seen as support; 0.8750 then 0.88 resistance. Cable back toward lower end of 1.34–1.3550 as USD “recovers.” Near-term US data risk: claims, GDP, core PCE.
JPY rates/BoJ: JGB stress easing ahead of BoJ; Ueda presser viewed as a potential accelerant but unclear what changes the structural story absent GPIF reallocation. Bias is JPY weaker.
JPY levels/trades: EURJPY breaks above 185.50/60 “quad top”; CHFJPY back near 200; USDJPY heading toward re-testing 159/160. Long USDJPY retained; 157.30/40 key support; 158.75/90 trigger zone; 160 next target area.
JPY flow/positioning: Some momentum stall led to reduced positioning; systematic/HF accounts recently bought JPY (3-day) but expectation is that reverses if USDJPY restarts higher. Notable: local real-money JPY selling observed (argues against being too early fading USDJPY upside).
CHF: Exited CHF longs as Greenland/geopolitical stress de-escalates and SCOTUS/Cook angle reduces Fed-independence tail risk expression (USDCHF lower). Still reluctant to be outright short CHF given it remains the “best” safe haven vs yen; also as a hedge while long SEK and ZAR. CHF selling seen from systematics and HFs.
CHFJPY: Continues to flirt with 200; buying dips still viewed as attractive (regret not already in).
CAD: Maintains short CAD (long USDCAD bias) despite pain from the move down to ~1.3786; used as hedge vs USDEM shorts. Caution: recurring real-money CAD demand is becoming a concern for the trade.
SEK structural theme: Strong conviction in “buy SEK on weakness,” driven by evidence of Scandinavian investors reducing US bond exposure and potentially increasing FX hedges/repatriation. Example cited: Alecta selling 70–80% of US bond holdings in 2025. Implication: persistent, slow-moving but durable USD/Scandi hedging flow narrative.
SEK trade expression: Increased EURSEK shorts on break of 10.6650 (key technical level). Idea supported by “hedging/regional repatriation” flow thesis.
NOK: EURNOK viewed as technically bearish after 3-day close below 100- and 200-DMAs. SHFs have bought NOK 3 of last 4 days. Running NOK cash short plus put spread.
NOK structural/flow thesis: Norwegian investors viewed as under-hedged after a decade of NOK weakness; if hedging behavior changes, the combination of investor FX hedging + daily Norges Bank FX flows could be a strong tailwind for NOK strength.
Options market color: Despite small spot flows in NOK/SEK, there was notable interest in NOK and SEK calls.
Norway event: Norges Bank expected to hold at 4.00% (interim meeting with new forecasts) and expected to be uneventful, but still a monitoring point for NOK.
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. 72% and 73% 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!