While the fundamentals support a strong dollar, the question remains: has the rally been overdone? As investors, it is crucial to weigh the potential for further gains against risks of a pullback, considering the broader global economic dynamics and the sustainability of current US policy trajectories.

What does this mean for fixed income investors?

The market has moved a long way in the last few weeks; investors have examined the fundamentals and have positioned themselves long USD versus other global currencies, with this positioning at its highest point of the year. A number of key levels have been hit for US assets across the board and we now believe that US exceptionalism and the “Trump Trade” are largely priced into the market. Therefore, when considering both valuations and technicals on top of fundamentals, we feel there is an opportunity to tactically underweight the USD versus the rest of the world.

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.



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