JP Morgan Sees USD Decline Stalling at Current Levels

The 'Sell America' theme has resurfaced as interventionist moves in Yen and Treasury markets have led to a decline in the US dollar. The Dollar Debasement theme, which affects bond yields, FX, and equities, relies on a dovish Federal Reserve, but this may not be the case.

JPMorgan notes that the move in the USD, as proxied by DXY, has been a -2.6% decline, dragging the index below the 100-level. The team believes this move appears mostly played out and would not chase it lower from current levels.

In USD/JPY, the currency pair has moved below the 160 level, which continues to act as a catalyst for intervention and may see additional pressure from increasing BOJ rate hike expectations.