Global FX Strategy: FX Compass: Different levels, same story

Research evidence excerpt

Global FX Strategy: FX Compass: Different levels, same story

Global Research

1 July 2026ab

Global FX Strategy FX

GlobalFX Compass: Different levels, same story

Shahab Jalinoos

Strategist

Figure 1: Elevated USDJPY implied vol stands out within G10Elevated shahab.jalinoos@ubs.com

+1-212-882-5532

Alvise Marino

alvise.marino@ubs.com

+41-44-237 8440

Benjamin Jarrett

benjamin.jarrett@ubs.com

+44-20-7567 5430

Meena Bassily

meena.bassily@ubs.com

+44-20-7567 1145Source:Bloomberg, UBS

With the world cup in full swing, the typical vol-suppressive effect on G10 FX markets

we have written about previously appears to be in play. This is despite the fact that rates

markets have contributed considerable movement since the 17 Jun FOMC. The fact the

4 July US holiday falls on Friday further diminishes the odds of major moves this week.

This week nonetheless has some key events. The most important being the US

employment data on Thursday. UBS economists make the point that June payrolls

numbers historically tend to show strong at first blush and then be revised down later,

suggesting a bad outcome could be even more concerning. Conversely, if the numbers

beat expectations clearly, it would strengthen the narrative that forces linked to growth

rather than energy prices are an alternative driver of inflationary pressure. With the

market already long USD, arguably the odds are higher of a material correction upwards

in EURUSD on the back of soft data than of sharp losses on stronger numbers. But with

the 200d moving average near 1.1650 likely to be a tough resistance, we would be

looking at levels at 1.1550 or above as interesting entry points for fresh EURUSD shorts.

Yesterday saw USDJPY push past 162.00 for the first time in 39 years. While interesting