J.P. Morgan: "The election outcome amplifies USD exceptionalism on multiple channels. President Trump’s proclamation for the US applies to the dollar as well. No other currency has what the dollar has: superior growth and equities, higher yield, defensive attributes. Even with no official tariff announcement, the sentiment shock in other countries could be material which should eventually strengthen USD (multi-quarter path for EUR/USD to 1.00-1.02, USD/CNY towards 7.40). Near-term risks is from direction of US yields, lack of visibility on the timing/ magnitude of US policies and mitigating responses from others.



Macro Trade Recommendations: Add cash overlay to EUR/USD put spread and re-enter short EUR/CHF to position for tariff risks and hit to PMI data, along with long USD/SEK. Keep yield convergence inspired JPY longs. EUR/NOK put spread provides policy vacuum hedge.



Emerging Markets FX: EM will now face challenges from tariffs, changing foreign policy, and US-domestic-centric policy which will likely keep rates higher. But EM FX risk appetite is already near extreme negative territory. We thus stay overall MW with UW in Asia. Focus bearish trades on laggards in the re-pricing.



FX Derivatives: Post-election fall in vols exceeds forward vol projected rolldown. Narrower Fed Funds Rate expectations should help FX vols  grind lower. Broad USD strength under Trump policies should be bullish for USD-based correlations. Consider [USD/CNH up, EUR/CNH down] divergence structures. JPY is caught between cross-currents ; consider conditional USD/JPY vs. CHF/JPY put switches for Yen weakness, with a KI USD put/JPY call to guard against intervention risks.



Technicals: EUR/USD whipsaws and tries to form a short-term low for a second time. USD/JPY extended rally after US election, but trend still looks tired. AUD/USD tries to establish a short-term bottom."