FX Outlook: Keep calm and carry on

Research evidence excerpt

FX Outlook: Keep calm and carry on

Arindam Sandilya AC (65) 6882-7759 Global Markets Strategy J P M O R G A Narindam.x.sandilya@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch 10 July 2026

Junya Tanase (81-3) 6736-1270

junya.tanase@jpmorgan.com

JPMorgan Securities Japan Co., Ltd.

FX Outlook Iran’s oil sales is a meaningful departure from the terms of

the ceasefire MoU. But the bar for a return to full fledged war

Keep calm and carry on that closes the Strait and returns us to a March/April-like

environment remains very high in our view.

• Oil prices knee-jerked higher on Middle East re-esca-

lation, but we view the bar for a Strait closure and a

Figure 1: A chronology of events in the Middle East leading up to the

return to Q2 war-peak conditions as high. That said, a latest flare-up

bullish dollar, bullish carry (financed via energy

importing low yielders) portfolio orientation looks

well-placed to absorb another inflationary geopolitical

shock;

• Volatility in tech stocks should not derail the broader

AI cycle narrative, and by extension our positive view

on the global capex cycle. Whether sectoral equity

rotation and broadening also promotes correlated geo-

graphical rotation out of the US is a TBD; unlike last

year, the absence of German fiscal optimism is a key

headwind.

• Japanese FM Katayama's comments signal political

intent to redirect GPIF purchases toward domestic

bonds; a max allowable shift to 31% JGB weight

implies ~¥12tn of yen buying — comparable to April–

May intervention in size, but a one-off flow unlikely to

reverse the structural depreciation trend.

• Our Mid-Year Outlook marketing suggests light posi-

tioning and greater conviction in FX carry than in Source: Various media outlets

USD longs. CHF shorts are consensus, JPY shorts are