JPMorgan: The Reasons for a Bearish Outlook on the Dollar Remain Intact

[JPMorgan: The Reasons for a Bearish Outlook on the Dollar Remain Intact] Financial Network, May 13 - After the results of the China-U.S. trade negotiations turned out to be more positive than expected, JPMorgan's foreign exchange strategists stated that although the momentum has weakened, the reasons for shorting the dollar still exist. "The rebound of the dollar relative to U.S. stocks has shown a lag, and this phenomenon is well-supported by logic," the JPMorgan team, including Meera Chandan and Arindam Sandilya, wrote in a report on Tuesday. Analysts pointed out that even as the stock market rebounds and interest rate markets reduce expectations for a Fed rate cut, several factors still exert pressure on the dollar. "The temporary tariff truce has lowered the probability of a U.S. recession, but it is also beneficial for growth in other parts of the world and, under certain measures, positions us in the middle of the 'dollar smile curve.'" JPMorgan also noted that in the current new situation, as market pricing indicates a reduced risk of a U.S. recession, the risk of going long on the yen is the highest; meanwhile, going long on the euro is relatively safer, as the decreased probability of recession benefits European economic growth, while Germany's fiscal outlook provides additional cushioning.