JP MORGAN CHASE(US:JPM)2025-07-15 01:58Investment Rating - The report maintains a bearish outlook on the USD, expecting further weakness despite significant year-to-date depreciation [6][7][9]. Core Views - The underlying macro landscape is shifting, with cyclical and structural factors contributing to the bearish USD view, including US moderation, tariffs, and policy uncertainty [6][7][9]. - Recent technical indicators have turned less USD-bearish, suggesting potential short-term consolidation, but the medium-term outlook remains negative for the USD [6][9][34]. - The report emphasizes the importance of tariff developments, which could lead to increased global growth risks and further pressure on the USD [14][22][23]. Key Currency Drivers - The USD TWI has decreased by 6% year-to-date, while the DXY has seen a 10% depreciation, marking the weakest first half since at least 1980 [7][9]. - Key targets for G10 currencies include EUR/USD at 1.19 for Q3, GBP/USD at 1.36 for Q4, and USD/JPY at 139 for one year [6][9][12]. - The report highlights a tactical neutral stance on EM FX while maintaining a constructive medium-term view [6][9][12]. Tariff Implications - Recent tariff announcements have raised the effective tariff rate significantly, particularly for Brazil, which could lead to negative growth and inflation risks [14][17][22]. - The report notes that broad and high tariffs would likely keep the USD downtrend intact, with potential impacts on global growth and inflation dynamics [22][23][24]. - The report suggests that safe-haven currencies like JPY and CHF may outperform in response to tariff-driven global growth shocks [23][24]. Trade Recommendations - The report recommends buying CHF against a basket of EUR and GBP, anticipating that CHF will benefit from global growth revisions and a more aggressive tariff agenda [51][54]. - In developed markets, the report favors low-yielding currencies with firming growth characteristics, particularly JPY as a hedge against a US slowdown [51][52]. - The report indicates a tactical retreat in EM FX due to overbought signals but maintains a structural bullish view on EM currencies overall [52][57].