Friday’s soft NFP print has shaken the confidence in the “higher-for-longer” U.S. rate path. With a 28bp drop in 2-year Treasury yields, we’ve likely seen the peak in short-term USD yield momentum, at least temporarily. Markets are recalibrating, and the dollar is vulnerable to further soft data, especially from upcoming ISM and inflation releases.

Meanwhile, the yen is benefiting from a twofold tailwind:

Positioning unwind as short-JPY trades are being cleared

Domestic bond instability following a weak 10-year JGB auction, which may force the BoJ to act defensively

Although the BoJ remains dovish in tone, market forces may override the central bank’s caution,  particularly if bond market volatility intensifies. Any further risk-off sentiment or dovish shift in U.S. data could extend USDJPY’s downside.

This trade offers a tactical opportunity to fade overextended rallies into key resistance, while aligning with both U.S. and Japanese macro narratives.

USDJPY

SHORT USDJPY

The recent imposition of a 39% U.S. tariff on Swiss imports adds a significant drag on Switzerland’s export-driven economy, particularly in key sectors like pharmaceuticals and medical devices. With exports to the U.S. accounting for ~6.5% of Swiss GDP, this shock is likely to weigh on both growth and inflation. The Swiss National Bank has already cut rates to zero, and markets are now pricing in negative rates by early 2026, putting the franc on the defensive.

On the other side, the yen has gained strength following the weaker-than-expected U.S. NFP, which led to aggressive unwinding of USD longs and a repositioning into safe havens. There’s now growing pressure on the BoJ to normalize policy, not purely due to inflation, but because of instability in the Japanese bond market. If fiscal stimulus adds more strain to the JGB market, the BoJ may be forced into a more hawkish posture.

This cross captures a weakening CHF narrative vs a strengthening JPY, underpinned by macro, policy, and positioning dynamics.

CHFJPY

SHORT CHFJPY

The pound is under pressure from both fiscal risks and weak growth outlook. July saw increased speculation around Chancellor Reeves’ potential departure and further government fiscal slippage. UK consumer confidence is deteriorating (savings intentions at 2007 levels), and retail sales data have been disappointing. A stagflation-like environment is taking shape with sticky inflation and stalling GDP.

The BoE is expected to cut rates this week, and although they’ll likely communicate a “gradual and careful” easing path, the fundamental imbalance remains clear: growth is too soft to sustain current policy rates. Meanwhile, the USD remains bid on residual tariff optimism and market resilience, even if that may be reassessed post-CPI.

This creates a narrative divergence where GBP underperforms USD as macro risks compound in the UK.

GBPUSD

SHORT GBPUSD

The euro has undergone a healthy correction after overly crowded long positioning earlier in July, especially following the US-EU trade agreement. However, with the ECB expected to remain cautious, only one additional cut now priced for 2025, and the eurozone showing signs of resilience (energy prices stabilizing, moderate inflation outlook), EUR still holds a constructive macro backdrop.

In contrast, the yen continues to weaken due to the BoJ's overly cautious stance, even after signing a $550B US-Japan trade agreement. Political uncertainty around LDP leadership and Governor Ueda’s reluctance to signal further hikes have kept USD/JPY elevated.

Japan’s inflation forecast upgrades were marginal at best, and there is a growing disconnect between policy rhetoric and inflation data. As long as BoJ underdelivers and the Fed stays sidelined, EUR/JPY remains a candidate for tactical long exposure.

EURJPY

LONG EURJPY

Following the latest Bank of Canada meeting, the central bank maintained a cautious tone but refrained from committing to further easing highlighting persistent inflationary pressures, especially in services and housing. The statement acknowledged that underlying inflation remains sticky and that any rate cuts will be gradual and data-dependent.

In contrast, the Swiss National Bank has already initiated rate cuts and remains one of the more dovish central banks among the majors. The SNB is not only comfortable with easing, but also has historically intervened to weaken the Swiss franc in the face of excessive strength especially when inflation is contained, as it currently is in Switzerland.

Canada is still battling inflation and taking a cautious approach to easing.

Switzerland is easing more proactively and has room to stay dovish.

Add to that Canada’s commodity-linked economy, which could benefit if oil and broader risk sentiment remain supportive. Meanwhile, Switzerland’s low-yield environment makes the franc less attractive during risk-on phases, especially when yields elsewhere remain elevated.

As a result, CADCHF looks well-positioned to trend higher, particularly if global risk appetite holds and BoC stays patient while the SNB continues to cut or signals further easing.

CADCHF

BUY LIMIT CADCHF

Gold Drops Nearly $100 in 15 Hours, What’s Driving It?

As I reviewed the market reaction following the FOMC’s July rate decision, one of the most striking moves came from gold. Prices fell sharply from around $3,320 to $3,272 in under 15 hours a nearly $50 decline that can’t be overlooked.

This move wasn’t about a surprise hike or a shock comment from Powell. It was about the market digesting the implications of a “higher-for-longer” stance. The Fed held rates at 4.50%, as expected, but the tone made it clear: they’re not in a rush to cut. And in an environment where real yields remain elevated and the dollar is gaining momentum, gold an asset with no yield faces natural headwinds.

What I find important here is the underlying driver: risk appetite. Equity markets remain firm, U.S. data continues to surprise to the upside, and investors are still chasing yield. As long as that narrative holds, there’s little reason for gold to rebound meaningfully in the short term.

Technically and structurally, the path of least resistance appears to be lower, with $3,200 as a probable near-term magnet. Of course, this doesn't mean we pick sides it means we stay data-driven, and stay adaptive to the next catalyst, whether that’s CPI, NFP, or Jackson Hole.

I'm a neutral to bearish into gold and looking for pullbacks around the $3.320 to be able to short with a better risk reward.

XAUUSD

GOLD is Looking Interesting After FOMC

USD Strength Theme: The market is shifting focus toward US exceptionalism, with strong corporate earnings and labor data offering a more compelling USD narrative.

Positioning Unwind: The first half of the year saw substantial USD short positioning. Now, with risk sentiment improving, traders are unwinding these shorts adding to dollar upside pressure.

Key Levels: A clean break below 1.1500 would be technically significant and suggest further dollar momentum could unfold.

EURUSD

SHORT EURUSD

Policy Divergence: The Fed is expected to stay cautious on rate cuts amid solid US labor data and resilient earnings. In contrast, the BoJ is likely to emphasize downside risks to growth and inflation, especially given Japan’s domestic political instability and backlash over the US trade deal.

Political Risk in Japan: PM Ishiba is under growing pressure to resign. This creates policy uncertainty and undermines confidence in Japan’s leadership typically bearish for the yen.

Technical Trigger: A divergence in tone between BoJ Governor Ueda and Deputy Governor Uchida could catalyze another leg higher in USD/JPY.

LONG USDJPY

The Swiss National Bank (SNB) surprised markets recently by holding rates, but they remain highly vigilant on inflation and have explicitly stated their willingness to intervene in FX markets to support the franc. With global risk sentiment under pressure  and carry trades starting to unwind slightly  CHF stands to benefit as a defensive currency.

At the same time, the U.S. dollar is facing downward pressure from softer inflation momentum, weaker consumer sentiment data, and expectations of a more dovish Fed stance into Q4.

If equity volatility picks up or U.S. macro disappoints this week, USD/CHF could unwind lower, especially with the SNB unlikely to resist CHF strength near key inflation inputs.

USDCHF

SHORT USDCHF


After the BoJ's subtle tightening bias last week and the shift in tone from Governor Ueda, there’s rising speculation that Japan is gradually moving away from ultra-loose monetary policy. Meanwhile, U.S. Treasury yields have shown signs of peaking amid softer U.S. economic surprises and growing anticipation of a Fed pivot in Q4.


The yen, deeply oversold and still under-owned by real money investors, could benefit from any deterioration in U.S. macro data or further dovish Fed commentary in the week ahead.

Additionally, geopolitical tensions in East Asia and month-end repatriation flows could further support JPY strength.

The Bank of England is facing a more persistent inflation problem than the eurozone, but recession risks in the UK are rising particularly in services and retail. Meanwhile, the ECB has room to pause without panic, supported by stabilizing inflation and positive PMIs.


As the EUR strengthens on structural confidence and less trade uncertainty, and the UK economy shows early signs of contraction, relative economic momentum favours the euro.

EURGBP

LONG EURGBP


Go long EUR/USD on pullbacks towards 1.1650, targeting 1.1880, with a stop below 1.1585.

Fundamental Rationale:
The ECB’s pause reinforced a "wait-and-see" stance but offered no resistance to recent euro strength. With inflation stabilizing and trade tensions showing signs of easing, investor positioning continues to favour EUR upside.

In contrast, the Fed is nearing a policy plateau, and softer U.S. inflation prints have capped USD demand.
If an EU-US trade deal materializes by the August 1 deadline, it could reduce macro uncertainty and push EUR/USD toward fresh YTD highs, especially as the eurozone rate path becomes more anchored.

Luca Santos

Luca Santos

Aug 06 2025

SHORT USDJPY

Luca Santos

Aug 06 2025

SHORT CHFJPY

Luca Santos

Aug 04 2025

SHORT GBPUSD

Luca Santos

Aug 04 2025

LONG EURJPY

Luca Santos

Jul 31 2025

BUY LIMIT CADCHF

Luca Santos

Jul 31 2025

GOLD is Looking Interesting After FOMC

Luca Santos

Jul 30 2025

SHORT EURUSD

Luca Santos

Jul 30 2025

LONG USDJPY

Luca Santos

Jul 28 2025

SHORT USDCHF

Luca Santos

Jul 28 2025

SHORT USDJPY

Luca Santos

Jul 25 2025

LONG EURGBP

Luca Santos

Jul 25 2025

LONG EURUSD