Macro/regime message

The report keeps the same regime call as the prior day, just with more tactical caution:

• Underlying trends intact: metals/commodities “ripping” → ToT boost for AUD/NZD and other commodity-linked FX.

• USD is “more complicated”: not seeing a clean reversal catalyst.

  • Bessent comments: market reaction viewed as overdone; US not intervening; “strong USD policy” rhetoric isn’t credible support right now.

  • Fed: “non-event”; no hike base case; USD bounce couldn’t hold.

  • Corporate USD buying: present but “not spectacular.”

• Net: hard to see abrupt reversal, but “we have come a fair way quite quickly” → expect consolidation risk, not trend reversal.

What they changed in positions (day-over-day)

The author admits execution friction (paid spreads, struggled to re-enter after taking profit), and shifts to a more trimmed/tactical posture.

EURUSD

• Still long EUR, but took profit on half (reduced cash risk).

• Notes the euro “noise” seems excessive given levels are only marginally above last year’s highs.

• Important risk line: below 1.1850 implies regime change.

  • If EURUSD breaks back below 1.1850, they expect a faster unwind (“puke fest”) because of a lot of high-strike call buying this week.

• Options adjustment: converted vanilla topside into call spreads (keeping upside but reducing premium/vega exposure after vol popped).

USDJPY

• Now short USDJPY (this flips versus the prior note where they had re-engaged long USDJPY).

• Rationale: headline-driven “implicit cap” is lower; bigger structural signal would be domestic Japanese flow change.

  • Mentions Japan Post Bank buying more domestic assets as a small but potentially precursor headline.

EURSEK

• Cut EURSEK shorts (i.e., no longer short EURSEK).

• Reason: SEK “lagging” recent broader moves; soft domestic data; “good run since December, let it settle.”

EURHUF

• Still short EURHUF.

• Thesis: less room for Orban election surprises; some interest returning to long HUF positioning after being avoided.

USDILS

• “Don’t mind” long USDILS here.

• Reasons: Iran risk, exporters complaining about ILS strength, and equity weakness could prompt correction.

Desk color by currency (the rest of the note)

GBP

• Still prefers short USD, but not via GBP due to sour UK politics; “better candidates out there.”

• Flow: GBP interest minimal; little catalyst before BoE.

• Trade idea: fade EURGBP lower, risk point 0.86.

• Levels:

  • Cable support 1.3750

  • Resistance 1.3890/00, then 1.40

JPY (technical + positioning)

• Team view aligns: not much new from Bessent; the market is just stretched.

• Franchise flows: no net JPY selling across tracked segments.

• Technical: another close below cloud base 153.64 and 100d 153.77 supports the USDJPY-short view; RSI back to neutral but they stress it’s not mean-reverting conditions.

CHF

• CHF outperformance continues; positioned as the “only viable haven” in FX in this tape.

• Systematics buying CHF; their longs back near last year highs (per JPM data).

• Bias: sympathetic to CHF strength, but prefers to sell USDCHF on a rally, not chase lower here.

AUD / NZD

• Both at new highs; Bessent-driven USD rally faded; Fed hawkish tilt couldn’t sustain USD strength.

• The author trimmed and is at the lightest since early Dec, but still wants to add on pullbacks.

• Levels:

  • AUDUSD optimal buy zone 0.6931 (also prior highs); initial support 0.6980/0.7000

  • NZDUSD optimal buy zone 0.5958; initial support 0.6000/10

CAD

• BoC held as expected; neutral; emphasizes uncertainty (trade/USMCA/geopolitics).

• Medium-term bearish CAD view remains, especially vs high yielders; rates pricing for hikes/easing looks inconsistent to them.

SEK / NOK

• Focus: Riksbank; watch how they talk about currency strength and inflation impact.

• Stated view here is core long SEK, add on weakness toward 10.65/70 (context implies USDSEK), and “own downside in EURNOK.”

• NOK flow note: HFs were strong NOK buyers (z-score 7.67) despite SHF selling streak.