**Credit: Original insights provided by eFXdata**
Source: https://www.efxdata.com/insights/3ecfea1266dcb8854acaf4e05132c94c.html
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## FX Strategy: J.P. Morgan Outlines Key Drivers and Trading Opportunities for Major Currencies
The global foreign exchange market remains in flux as central banks across major economies recalibrate their monetary policy, and new economic data shapes expectations for growth and inflation. According to recent insights published by eFXdata, J.P. Morgan identifies the key macroeconomic events, central bank meetings, and data releases likely to drive currency moves in the near-term. Below, we summarize J.P. Morgan’s latest FX strategy, examining major currency pairs, expected market reactions, and recommended tactical trade setups.
### 1. Central Banks Take Center Stage
#### FOMC Meeting: A Pivotal Moment for the US Dollar
– The Federal Reserve’s June meeting is highlighted as the most critical event for the USD in the coming week.
– Markets await the updated “dot plot” to scrutinize policymakers’ views on the appropriate pace and scale of interest rate cuts for the remainder of 2024 and 2025.
– Core inflation is beginning to moderate, but still remains above the Fed’s 2 percent objective, prompting speculation over the timing and extent of policy easing.
– According to J.P. Morgan, market pricing currently discounts roughly 40 basis points of Fed rate reductions by December.
– The FOMC meeting coincides with the release of May Core CPI inflation, adding further weight to the risk calendar.
– A dovish surprise—either through lower inflation, or a more accommodative Fed forecast—could put renewed downward pressure on the dollar, while hawkish signals would likely reverse some of the recent USD weakness.
#### ECB and BoE: Focus Shifts to Timing and Forward Guidance
– The European Central Bank, after cutting rates in June, signaled a ‘meeting-by-meeting’ approach to additional policy moves.
– Markets expect the ECB to proceed cautiously, given persistent core inflation and wage growth concerns.
– The Bank of England is expected to hold rates steady in the upcoming meeting, deferring any changes until more robust data confirm a sustainable disinflation trend.
– J.P. Morgan notes that the pound remains supported by relatively hawkish BoE communication versus the ECB.
– Both the ECB and BoE’s guidance will be closely watched for shifts in tone, particularly any acknowledgment of easing labor market tightness or fading inflation, which could lay the groundwork for 2024 rate cuts.
#### Bank of Japan and Others: Signs of Policy Divergence
– The Bank of Japan’s June meeting is flagged as another event with market-moving potential.
– Recent yen weakness and sticky inflation bring debate over tapering bond purchases and raising short-term rates.
– J.P. Morgan expects the BoJ to set the stage for tightening but stop short of delivering an immediate hike.
– Elsewhere, the Reserve Bank of Australia is expected to hold rates steady, but the minutes of their meeting may contain hints about future hikes if inflation surprises to the upside.
### 2. Data Releases: Inflation, Labor Markets, and Growth Under the Spotlight
– US Core CPI and Payrolls: Alongside the FOMC, US data takes center stage. Early June payrolls surprised to the upside, keeping USD supported.
– Eurozone CPI: Final headline and core readings should confirm the recent moderation, with wage data eyed for signals of inflation persistence.
– UK Data: Both labor market statistics and GDP will influence BoE expectations and GBP direction.
– China: Industrial production and retail sales will inform risk sentiment and currencies exposed to Chinese growth (like AUD and NZD).
### 3. Major Currency Pairs: Tactical Opportunities and Key Levels
#### EUR/USD: Priced for Divergence, Awaiting New Catalysts
– EUR/USD hovers near recent highs as
Read more on GBP/USD trading.