J.P.Morgan Issue Short EUR/USD Recommendation

Late on Friday saw J.P.Morgan note that they "think there is scope for the FOMC dots to once again surprise markets, not unlike the June FOMC. We tactically add USD length in the portfolio ahead of the meeting."

• "We re-introduce short EUR/USD in the portfolio, which has been one of our more favoured and high-conviction calls over the past several months. We were proven too cautious in between the disappointing August U.S. payrolls print and the ECB meeting several days later, in which the ECB lowered its pace of purchases but where Lagarde was at paints to justify the adjustment as a recalibration rather than tapering. The upward revisions to the inflation forecasts ultimately underwhelmed too - which in aggregate help explain EUR's residual softness following the announcement. This leaves the focus squarely on the upcoming FOMC where a cumulative six hikes in the dots could go a long ways towards quantitatively illustrating just how divergent the Fed and ECB paths are in coming years."
• As a result, they sold EUR/USD at $1.1773, with a stop-loss at $1.2126.