Institutional FX Insights: JPMorgan Trading Desk Views 12/3/26
G10 FX Daily Report Summary
General Market Sentiment
Yields and Oil Prices: There was a significant increase in yields as the market reacted to ongoing conflicts and challenges in shipping through the Strait of Hormuz. The spike in oil prices to $100 has contributed to market fatigue, leading to cautious trading behavior.
Risk Levels: Current risk levels are lower, resulting in more muted market reactions. Traders are hesitant to make decisive moves until there is clearer evidence of a medium-term strategy regarding the conflict.
Currency Analysis
Euro (EUR)
The euro has shown resilience around the 1.15 handle, despite recent hawkish comments from ECB members. The price action indicates a cautious approach from traders, with significant selling noted but without panic.
Key levels to watch:
Support: 1.1530 and potentially 1.1470 (November lows).
Resistance: 1.16 and above.
British Pound (GBP)
The market is starting to look past political comments regarding the conflict's resolution, with crude oil prices continuing to pose risks. The internal political situation in the UK, highlighted by the release of the Mandelson files, adds to uncertainty.
Key levels to watch:
Support: 1.3280/00.
Resistance: 1.3400/10 and 1.3480.
Japanese Yen (JPY)
The JPY is under pressure due to rising oil prices and a lack of intervention signals from the Ministry of Finance (MoF). USDJPY is approaching highs not seen since July 2024.
Key levels to watch:
Resistance: 159.25/35 and the psychological level of 160.
Swiss Franc (CHF)
The CHF remains stable, although there was a sudden drop in EURCHF. The ongoing geopolitical situation keeps the risk-off sentiment alive, which supports long CHF positions.
Current flow remains light, but systematic buying of CHF is noted.
Australian Dollar (AUD) and New Zealand Dollar (NZD)
Rising consumer inflation expectations in Australia may pressure the RBA. Increased currency hedging from Australian pension funds suggests a shift away from the US dollar.
The strategy remains to buy AUD on dips, particularly against currencies negatively impacted by rising energy prices.
Canadian Dollar (CAD)
USDCAD has traded sideways amidst skepticism about de-escalation in the Middle East. The loonie's performance has been lackluster, prompting a cautious stance from traders.
Norwegian Krone (NOK) and Swedish Krona (SEK)
Both NOK and SEK have shown limited movement, with NOK not benefiting from rising oil prices. The lack of support for NOK suggests exhaustion, but elevated energy prices could still favor NOK in the long run.
SEK is under pressure despite reports of domestic buying, indicating a cautious outlook until geopolitical tensions ease
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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!