What’s driving markets separating “story” from “flow/positioning.”

Narrative catalysts (headlines)

  • Warsh news: market blaming it; the author thinks the impact is less about hawkish rates (rates “unmoved”) and more about Fed independence / USD debasement optics.

  • US data risk: weak labor data would strengthen the administration’s push for lower rates, reinforcing USD downside later.

True engine (positioning + deleveraging)

  • FX is described as a second derivative of:

    • Commodity leverage / deleveraging

    • Cross-asset stress hints: crypto “creaking,” tech stocks could wobble

  • Net result: USD has a bid during the unwind, even if the medium-term bias is still USD-lower “once dust settles.”

2) Book right now (positions + risk posture)

They emphasize they reduced risk and are waiting to re-add.

Core convictions / “digging in”

  • Short USDJPY

    • Reasoning: on a trade-weighted basis JPY is still weak despite “international concern”; Takaichi clarifying comments suggests sensitivity about the signal the market might take.

  • Long EURUSD via call spreads only

    • No cash EURUSD currently; preference for defined-risk upside in a grindier, vol-heavy environment.

  • Short EURHUF

    • “Well behaved” during the mess; continued interest to re-engage long HUF; less fear of pre-election policy surprise.

  • Short USDZAR

    • Kept room to add; constructive bounce off extremes but not max size yet.

Other positions mentioned

  • Long NZDCAD and long USDCAD

    • That combination is consistent with: long USD vs CAD, and long NZD vs CAD (i.e., CAD underperformer theme).

  • Notable watch: EUR positioning monitor showed “some bad ones bought” (fresh, potentially weak-handed longs).

3) Key levels and “what changes my mind”

Trigger points.

EURUSD: the line in the sand moved lower

  • 1.1890 break triggered fast-money reduction.

  • ECB this week expected to be a policy non-event, but language/Q&A is key.

  • If EURUSD breaks below 1.1800/10 (December highs), they expect more concern and potential further liquidation of new longs.

  • Their stance: still bearish USD overall, but expects it may become more of a grind, hence call spreads.

USDJPY: fighting technicals, managing with options

  • They acknowledge technicals are against them:

    • Closed back into the cloud (153.64) and above 100d (153.97).

  • They “optionalised” more delta ahead of US employment data.

  • Topside resistance: 156.10/30 (cloud top + 50d).

GBPUSD / EURGBP (they’re sidelined)

  • No GBP positions.

  • EURGBP: fade dips into low 0.86s; 200d ~0.8650.

  • Cable levels: resistance 1.3725/30, support 1.3590/00.

4) Other desk colour (AUD, CHF, CAD, SEK/NOK)

AUD/NZD: commodity shock dominates

  • Gold down ~21% since Thursday wiped YTD gains; AUD -2.5%.

  • AUD support zone highlighted: 0.6900/30; they bought some but kept it core ahead of RBA.

  • RBA tonight: author leans hike (market ~18 bps priced), but warns it may be a “gap up then reverse” if guidance is cautious; still constructive medium term.

CHF: haven bid, but they’re flat

  • Massive USD selling last week; systematics bought CHF; RM sold CHF.

  • They’re flat CHF, but see EURCHF as attractive to buy; rallies likely capped in risk-off.

CAD: still bearish CAD medium term

  • Q4 y/y GDP 0.6% slightly below expectations; USMCA challenges.

  • Maintains a small short CAD; RM demand for USDCAD noted Friday.

SEK/NOK: hit by commodity/energy pullback but thesis intact

  • Peace talks headlines + Iran talks weighed on oil/gas; expects pressure on NOK, less on SEK.

  • Despite pain, both held up “relatively well.”

  • Reduced cash exposure, kept options; still pro-cyclical + rotation away from US assets + hedging theme.