Big picture: what changed

The report frames this week as a potential “gear shift” in the USD story:

  • Volatility has risen sharply; price action is being amplified by cash + options flows.

  • Trump’s comments are treated as an explicit comfort with USD weakness, unnerving investors.

  • Potential near-term “speed bumps,” not true reversals:

    • Month-end USD corporate demand

    • FOMC/Powell sounding resilient (but market may discount it given leadership uncertainty)

    • Some ECB discomfort with EUR strength (seen as secondary, not the main policy driver)

Core implication: the USD downtrend can continue, but with frequent, sharp counter-moves.

Trades and positioning (what they’re doing)

This is the actionable core of the note.

EURUSD

  • Position: long EURUSD (trimmed to a core position).

  • Plan: buy dips toward last year’s high (which was breached).

  • Rationale: shorts built this year are being squeezed/cleared; 1.20 is not historically extreme; ECB discomfort is noted but not dominant.

  • Risk control: stop on cash moved up to 1.1850.

  • Context: EUR spiked to 1.2081 on Trump comments.

USDJPY

  • Position: added to USDJPY after taking profit near 153 earlier.

  • View: reasons to buy JPY are limited beyond “signal,” unless Japan domestic flows turn (then bigger).

  • Technicals/levels cited:

    • Broke below 153.00/30 pivot, 100d at 153.76, cloud base at 153.64.

    • Next support: 151.40/50, then 150.

  • Warning: RSI coming out of oversold; if price reclaims those broken levels, a squeeze risk rises.

USDCAD

  • Action: cut USDCAD.

  • View: CAD underperformance on crosses still makes sense, but USD weakness is dominating.

  • Event: BoC expected to hold; forward guidance likely unchanged (“about the right level”).

  • Medium-term CAD concern: worsening US-Canada trade relations.

EURSEK and EURHUF

  • EURSEK: took some profit.

  • EURHUF: rotated into short EURHUF (i.e., long HUF vs EUR).

GBP

  • Frame: GBP is mostly reacting to USD, not UK-specific drivers.

  • Cable: through 1.3750/90 (4-year highs); likely buy on dips, but author prefers USD shorts elsewhere.

  • Levels: resistance 1.3890/00, then 1.40.

  • Flow color: USD selling seen, led by systematic/real money, but not as large as the price move implies.

CHF

  • Observation: CHF strength is unusual given a pro-cyclical backdrop; possibly “sell-America” safe-haven demand plus CHF liquidity.

  • Plan: look to sell USDCHF on a rally (e.g., if month-end USD demand or the Fed causes a bounce).

  • Watch: SNB sensitivity increases if EURCHF moves quickly toward 0.91.

AUD and NZD

  • Catalyst: Trump comments drove a quick ~0.5% move higher in both.

  • AUD thesis: still bullish on pro-cyclical setup, hedging flows, and a relatively hawkish RBA.

  • RBA: inflation print slightly above forecast; next meeting seen as somewhat binary; bias is to buy/add AUDUSD on dips.

  • Levels given: AUDUSD add zone starts around 0.6887 (38.2% Fib); NZD level cited as 0.5932.

FX Options: Higher Volatility Risk Regime

The forex market has entered a higher volatility phase, driven by JPY intervention fears and USD weakness. EUR/USD breached the 1.2000 barrier, igniting implied volatility. The 1-month contract surged from 6.5 to 9.5, settling at 8.0 as spot returned below 1.2000. EUR calls now hold their highest premium over puts since 2020, signaling expectations of deeper USD weakness.

AUD/USD broke key levels at 0.6900, 0.6950, and 0.7000, with 1-month implied volatility spiking from 7.6 to above 10.0. Risk reversals flipped in favor of AUD calls, hitting levels unseen since 2009, reflecting fears of further AUD/USD gains.

USD/JPY flows show demand for downside strikes below 150.00 amid intervention concerns, while topside strikes at 155.00 suggest limited recovery expectations. GBP/USD implied volatility rose near 1.3900, with 1-month highs reaching 7.9 before easing to the lower 7s, still elevated from recent lows.

Higher implied volatility and USD put premiums have increased option costs for selling USD, while reverse-knock-out options gain traction among those hedging against further USD weakness.