Macro / overnight

• Big headline shift overnight: US/Iran have agreed a 2-week ceasefire, taking markets back from the brink for now.

• The move happened fast and a lot of the initial price action was already on by the time Europe came in.

• Core question this morning: do you chase the risk-on / USD lower move here, or assume we’re just setting up for the same problem again in two weeks?

• House tone here is tactical rather than structural, but there is a growing sense that:

  • the escalation premium is coming out of the USD

  • and some “erratic US policy” premium may also need to come out

Market tone

• Risk-on across markets

• USD softer

• But conviction is still capped by:

  • uncertainty around whether the ceasefire holds

  • lack of clarity on the Strait

  • concern this may just be a temporary political offramp

The desk read is that if the worst-case escalation is avoided, the USD can stay modestly offered from a flow/credibility perspective, even if it is not a clean “sell dollars against everything” environment.

FX themes by currency

EUR

• EUR remains the preferred expression of tactical USD shorts.

• The euro was already trading better than expected during the escalation phase, and now with the ceasefire it looks well placed.

• Spot has pushed back above the moving average cluster around 1.1670–1.1690.

• A close above that zone would be technically meaningful and suggest the market had become a bit too short EUR in recent weeks.

• The author has re-engaged in EUR longs after missing the earlier topside move.

• Takeaway: EURUSD is the cleanest way to play a near-term USD credibility / de-escalation unwind.

GBP

• Sterling should benefit from the softer USD backdrop, but the view is that EUR is still preferred to express USD downside.

• UK-specific constraints remain, especially with local elections on 7 May approaching.

• Preference remains to stay long EURGBP and add toward 0.8680 if seen.

• Cable resistance/watch zone: 1.3485 / 1.3500, the high since the conflict began.

• Takeaway: GBP can rise with the backdrop, but upside may be more limited than EUR.

JPY

• The ceasefire has reduced the urgency of defensive JPY longs.

• The author has used the move to exit the remaining JPY longs and reset.

• View now is that USDJPY may struggle to revisit 160 soon, but the cross-yen price action is still poor, which makes JPY longs less attractive tactically.

• Also a Jiji story dampened expectations of a near-term BoJ hike, with pricing backing off.

• If USD selling extends, supports are:

  • 50d: 157.135

  • 100d: 156.80

• Takeaway: less conviction in JPY longs here; prefer expressing USD downside elsewhere.

CHF

• Slightly puzzling price action: broader FX is trading the ceasefire as risk-positive, but EURCHF is not following through higher.

• That feels inconsistent with:

  • yesterday’s reserve-data-driven bid tone

  • and the broader softer-USD / calmer-risk backdrop

• Bias is to buy a dip toward 0.92, assuming ceasefire headlines remain constructive.

• Takeaway: CHF underperformance still looks plausible if de-escalation sticks.

AUD / NZD

• AUDUSD buy-on-dips is the preferred short-term strategy in the G10 beta space.

• The ceasefire supports risk sentiment and should leave the USD offered on rallies in the near term.

• Preferred AUDUSD buy zone: 0.7017 / 0.7043 Fibonacci retracement area.

• RBNZ held rates, but the message was more hawkish than expected.

• Governor Breman said the committee discussed hikes now or in May, signaling concern around inflation expectations.

• That triggered a sharp AUDNZD reversal lower after new highs near 1.2200.

• NZD has outperformed overnight, but faces technical resistance at 0.5846 / 0.5848, where the 100dma and 200dma sit.

• Takeaway:

  • near term: AUDUSD dips are buyable

  • but NZD has become more interesting after the hawkish RBNZ surprise

CAD

• The ceasefire has helped drag USDCAD back below 1.39.

• Even so, the desk remains bearish CAD, especially on crosses, because:

  • Canadian growth concerns remain

  • broader underperformance persists

  • systematic selling of CAD has resumed

• Key level below: 200dma at 1.3816

• Takeaway: USDCAD can drift lower on the softer USD theme, but the bigger preference remains short CAD on crosses.

Positioning / trade color

• JPY longs exited

• Tiny cable shorts covered

• EUR longs initiated / rebuilt

• EURGBP longs retained

• Tactical bias is now:

  • short USD selectively

  • especially vs EUR

  • while avoiding overcommitment given the ceasefire is only temporary

Flows

• Overnight flow was notable for heavy USD selling from DHF and SHF

• The DHF community appeared to favor EUR

• In JPY, hedge-fund buying was seen, but it was offset by local corporate flow

• In CAD, systematic sellers returned

Key levels to watch

• EURUSD: moving average cluster at 1.1673 / 1.1690

• EURGBP: add toward 0.8680

• GBPUSD: 1.3485 / 1.3500

• USDJPY: supports at 157.135 and 156.80

• EURCHF: buy dip toward 0.9200

• AUDUSD: buy zone 0.7017 / 0.7043

• NZDUSD: resistance 0.5846 / 0.5848

• USDCAD: 200dma at 1.3816

What clients should hear this morning

• The immediate market read is de-escalation = softer USD, but this is a tactical trade, not full regime certainty.

• Best expression of the move is still long EURUSD.

• JPY longs are less compelling now that the immediate crisis premium is fading.

• GBP should benefit, but EUR remains the cleaner vehicle.

• In high beta, AUDUSD on dips looks attractive, while NZD has improved materially after the RBNZ.

• CAD still underperforms on crosses, even if USDCAD softens.

Bottom line

Morning call bias is tactically USD-negative after the ceasefire, with EURUSD the preferred expression, EURGBP longs retained, JPY longs reduced, and AUDUSD dips buyable — but conviction remains guarded because the ceasefire is only a two-week pause, not a full resolution