JPMorgan entered a short EUR/USD position on Friday from 1.2474, with a stop at 1.2735, and an open target. They’re about 60 pips underwater in the trade, which they re-established after their last trade hit its profit target at 1.25 on Nov 10.

In broad terms, this trade comes in line with JPM’ structural bullish USD view where JPM is still very comfort owning dollars since late summer despite signs of a dollar overshoot and building position risk.

“It is because we have been comfortable with several medium-term processes which have further to run, like Fed hikes on schedule for June 2015…,” JPM says.

More specifically, JPM’s rationale behind this call revolves mainly on the following 2 points:

1- “The activity data was probably the euro’s best chance of a reprieve for the coming few weeks; so with this now out of the way, and indeed with the possibility of a downside surprise to HICP and the ECB maybe starting its ABS programme, we re-sell EUR/USD in cash to maintain a decent delta to transatlantic monetary divergence,” JPM argues.

2- EUR/USD could also be pressurized by the expectation of reserve re-cycling should the SNB intervene to support EUR/CHF,” JPM adds.

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