The Macro Landscape Turns More Dollar-Positive

J.P. Morgan has turned structurally bullish on the US Dollar due to US economic resilience and sticky inflation, leading to the first bearish EUR/USD forecast in a year.

Key Takeaways

• 1.The macro landscape has shifted to be more supportive of the US Dollar due to inflation surprises, resilient growth, and a more hawkish Fed.
• 2.J.P. Morgan has pivoted to a bearish EUR/USD forecast for the first time in a year, targeting a 1.13-1.15 range in the second half of 2026.
• 3.Japanese Ministry of Finance (MoF) interventions are seen as unable to reverse the fundamental JPY-bearish trend; the 4Q26 target for USD/JPY is 164.

Table of Contents

• The macro landscape turns more dollar-positive
• Trade recommendations
• JPY: MoF Intervention does not change our mid-term Yen-bearish view
• EUR: Increasing bearish exposure and initiate EUR/USD shorts via options
• Neutral GBP: Politics overshadows carry, growth
• Bearish CHF; use as funder vs NOK
• Bearish bias on SEK on low carry, domestic and equity headwinds
• Bullish NOK & upgraded on hawkish CB, terms of trade, carry environment
• CAD: We retain a strategic bearish bias and prefer using CAD as a funder
• AUD: Support fading; AUD/USD to 0.71 by 3Q26
• NZD: Recovery continuing; NZD/USD to 0.62 by 3Q26
• CNY: Stay bullish CNY FX post Trump-Xi summit
• FX Macro Quant: Carry, ToT, growth and fiscal divergences continue to deliver in G10
• FXO Themes In Play
• FX forecasts

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