On January 4th, JPMorgan Chase suggested increasing exposure to the Japanese yen to prevent the risk of an unexpected slowdown in the US economy. Although JPMorgan’s baseline expectation is for the US dollar to further strengthen in the first quarter of 2025, “optimism towards the US is already well reflected in prices, even though underlying details have softened,” strategists such as Meera Chandan wrote in a report on Friday. For our bullish view on the US dollar, this is a constantly changing risk factor that needs attention, but going long on the yen looks more attractive; increasing exposure to the yen. One way to prevent the risk of unexpected slowdown in US data is to maintain a long position in the Japanese yen. It is expected that there is still room for further weakening of the euro, although the pessimistic sentiment towards Europe has been digested by the market; After some profit taking in the previous period, it is recommended to increase the short position of EUR/JPY and maintain the short position of EUR/CHF and USD.
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