Key Currency Views: Pausing the bullish USD narrative (temporarily), while carry pays the bills

Research evidence excerpt

J P M O R G A N

Global Markets Strategy

14 August 2026

Key Currency Views

Pausing the bullish USD narrative (temporarily), while

carry pays the bills

We have mostly neutralised our USD long recommendations, but

maintain a bullish bias given valuations and still-high carry...

Global FX Strategy

...while payrolls haven’t provided a catalyst for strength, Fed vigilance should

also prevent a substantial weakening.

(44-20) 7134-2924

J.P. Morgan Securities plc

With all the hand wringing around the dollar, carry continues to pay the

bills with returns of 6-12% YTD.

Arindam Sandilya

Pro-cyclical signals have become stronger, reinforcing the case for carry,

i.e. the “Bullish beta” view. The US is middling on growth and equity

momentum.

DM: Preferred funder is CHF vs. a basket of DM high yielders (AUD,

NOK, USD). EM: Bullish on COP, MXN, HUF and TRY. Several high

yielders have positive growth momentum as well (Figure 1).

Meera Chandan AC

(65) 6882-7759

JPMorgan Chase Bank, N.A., Singapore Branch

Patrick R Locke

(1-212) 834-4254

J.P. Morgan Securities LLC

James Nelligan

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(44-20) 3493-6829

J.P. Morgan Securities plc

It is premature to look for low-yielding cyclical FX to make a comeback.

Without Fed cuts, expect FX to remain a single-factor, carry-driven market.

Historical US-Japan yen intervention hasn’t led us to change our USD/

JPY target of 164. All eyes are now on the BoJ to deliver a more aggressive

pace of hikes or for Japan to mobilise repatriation…

Ben K Jarman

… yen mean-reversion plays are more viable vs. other funders such as

CHF rather than the dollar.

Anezka Christovova

Targets: NOK, ILS, KRW, COP, MXN marked higher; CHF, HUF, CLP

marked lower

G10: EUR/USD 1.13-1.14 2H, 1.10 2Q27. USD/JPY 164, both unchanged.

EUR/CHF 0.95 (0.92). EUR/NOK 3Q 10.80 (10.90).

EM: USD/CNY 4Q 6.70. USD/KRW 1490 (1560). USD/MXN 17.25 (17.30).

USD/BRL 5.20, unchanged. USD/ILS 2.85 (2.95). USD/COP 3200 (3500).

Figure 1: Looking for carry with good growth? Several candidates fit the bill (AUD in DM, MXN,

HUF in EM)

Y: FX 1-month implied yield (%)

…