J.P. Morgan has revised down its near-term outlook for the Japanese yen, citing political uncertainty,
- expects USD/JPY at 146 in the third quarter, compared with its previous forecast of 141
- projections are for the pair to ease back to 142 by year-end and 139 by the second quarter of 2026
Among G10 currencies, the yen was the only one downgraded. The bank remains constructive on the euro, keeping forecasts unchanged at
- 1.20 for EUR/USD in Q4
- and 1.22 in the first half of 2026, with a potential catalyst seen in softer U.S. data or a Federal Reserve pivot.
Strategists continue to recommend being short the U.S. dollar against the euro, commodity currencies and the yen as a defensive hedge, while staying overweight Scandinavian FX versus the euro on valuation grounds. They remain bearish on sterling given fiscal and growth concerns
- favours emerging-market currencies, with its strongest conviction in EMEA
