J P M O R G A N Global FX Strategy 11 July 2025 Key Currency Views Why the bearish dollar view still holds Figure 1: Various systematic/technical indicators have turned less USD-bearish; while this could lead to consolidation in the near term, we are downplaying the significance on the medium-term view Source: J.P. Morgan See page 49 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be ...

Investment Rating - The report maintains a bearish outlook on the USD, indicating a potential for further weakness due to various macroeconomic factors [1][17][42]. Core Insights - The quality of USD carry has deteriorated, influenced by softer growth, lower real yields, and rising term premiums, which historically correlate with negative outcomes for the USD [17][42]. - FX hedge rebalancing from under-hedged sectors in Europe and APAC is expected to continue acting as a depressant on the dollar [17][42]. - The report emphasizes thematic differentiation across FX, favoring mid- to low-yielding currencies and highlighting the outperformance of current account surplus currencies [17][43]. Summary by Sections FX Outlook - The report suggests staying bearish on the USD, with valuation undershooting compared to rates and equities, and a lack of discrete catalysts for strength [1][17]. - Historical data indicates that significant CNY strength is not a prerequisite for USD weakness, and constructing carry-efficient short dollar proxies is recommended [1][17]. Macro Trade Recommendations - The report recommends being overweight in JPY, EUR, Scandi, and Antipodeans while underweighting USD and GBP [2][43]. - It suggests re-selling CAD/NOK as a carry-efficient EUR/USD proxy and buying 6m USD/CAD put spreads [2]. Emerging Markets FX - The report is optimistic about emerging markets FX heading into H2, supported by diminishing US exceptionalism, with a preference for EM Asia 'creditor' currencies and CEE euro-proxies [3][43]. - It advises staying selective in commodity and frontier markets [3]. FX Derivatives - FX volatility is expected to remain neutral into Q3, with a potential pickup later on, and positioning for USD skew underperformance is recommended [4][43]. - The bearish USD trend may see some pause in the summer, but it is too early to suggest a lasting bottom for the dollar [4]. Technical Strategy - The report indicates that the bearish trend for the USD is likely to continue, with key targets set for various currency pairs against the USD [42][43]. - It highlights the importance of monitoring macroeconomic indicators and central bank policies that could influence currency movements [42][43].

V i e w p o i n t | Brian Levine +1-212-816-6896 brian.levine@citi.com Osamu Takashima +81-3-6776-3251 osamu.takashima@citi.com 29 May 2025 13:15:24 ET │ 10 pages Global FX Strategy Uncertainty is the only certainty CITI'S TAKE FX markets have been quick to fade the overnight USD rally after President Trump's IEEPA tariffs were struck down in court; we see this as a market recognition that this ruling will be appealed and that there are other tools available for the Trump administration (such as Section 122 ...