JPMorgan: FX - FJElite

EUR/USD length continues to get cut, with ev idence ofoutright EUR/USD downside exposure increasingly in vogue. Each of our metrics pointed to sizable EUR/USD-lower flows this week. That included 2.1-sigma reduction of EUR longs in the futures space, and 2.4-sigma preference for puts over calls in options (Figure 1). lm momentum in options llow now points to clear bias for EUR/USD-lower for the first time since 1Q'25 (Figure 2). Layering in more medium-term flows and averaging futures/options data. EUR/USD length has likely almost fully neutralized (Figure 3).

Equally notable is that EUR downside is not limited to merely EIJR/USD.

Figure 1 shows this week's net options flow (calls vs puts) and shows a clear bias lower in FUR crosses as well - most notably EUR/AUD (a core recommendation in our macro portfolio) but also vs CAD. HUF & JPY. EUR flows vs GBP & CHF were more balanced by comparison.

Cable flows w/w were less aggressive than EUR/USD, but short positioning is nevertheless starting to look more entrenched. GBP/USD flows for the week averaged between -1-sigma (futures) and -1.4-sigma (options) - milder than EUR/USD. but directionally consistent (Figure 1 ). But given a more elevated short base from February selling, cable has now reached -2-sigma short in levels terms in futures (Figure 4). EUR/USD positioning is therefore relatively cleaner and more neutral. Meanwhile. EUR/GBP trading lower likely has some clement of deleveraging in it. as short-term flows reached +2-sigma ahead of the Iran conflict (Figure 5).

A holistic view of positioning indicators points towards more l SD risk still in EM than vs G10. Scanning across option flows as well as traditional indicators (futures, EM Client Survey), we still see dollar short positions persisting vs the likes KRW, CNY, and CLP (Figure 6). Consensus longs like ZAR have been scaled back closer to neutral. Not coincidentally, the JPM EM FX Risk Appetite Index has subsequently converged to our broader metric of USD positioning, which is also neutralizing (Figure 7).

In G10. AUD remains (very) long, while EUR length has been pared back as discussed. USD/CHF stands out as a case where positioning indicators are not aligned, as we've discussed recently.