G10 FX Daily Report - 11th March 2026

## EUR

The world was ending Monday, the war was over on Tuesday; we are somewhere in between! Uncertainty and headlines abound, making it challenging to profit from yesterday's price action. The longer the situation remains stagnant, with minimal shipping traffic, the more nervous the market will be. The only leverage the Iranians have is the oil price. We are also seeing credit concerns, with JPMorgan marking down some portfolios, and today's CPI report adds to the uncertainty. The fleeting reaction to the soft payrolls print on Friday suggests the market will focus primarily on the Middle East.

I still can't shake my yen view, especially with recent developments in the US outside the conflict, including concerns over private credit and the soft payroll last week. However, it's not been working well apart from minor trades in crosses. I remain positioned for now and have crossed half back up again, given the rallies elsewhere with euros and pounds.

Elsewhere, I’m staying short USD/CNH and have squared up EUR/HUF shorts following the massive move yesterday. I’m looking to sell rallies towards 390 again, but all in manageable sizes due to volatility. I've also tentatively started selling the bounce in USD/ZAR.

### ECB Commentary

I previously mentioned that the extreme pricing for the ECB seems nonsensical, and I still believe that holds. For an inflation-targeting central bank, there are clear concerns. Recent comments from various Governors display differing levels of urgency, with Lagarde stating she wouldn't allow Europe to experience the same inflationary pressures as post-Ukraine invasion. I believe potential hikes will have less of a supportive effect on the currency, given that the economic recovery path is fraught with danger compared to last year.

## GBP

There's little to no edge in this geopolitical headline environment, especially with state officials spreading misinformation. The situation escalates further, potentially involving mines in the Strait, which is alarming. I was surprised to see how far things swung yesterday, particularly in emerging markets and the short end. Positioning remains light on the desk.

In the UK, media reports highlight OBR Chief Economist David Miles, who expressed concerns about the implications of the Iran war on inflation forecasts. It seems their year-end forecast of inflation dropping from 3% to 2% may be unrealistic. Reeves shows no sign of canceling the fuel duty rise to alleviate the crunch, which complicates matters.

Flow-wise, DHFs are forming a sell streak in GBP, while SHFs were better buyers yesterday. The double top of 1.3480 has been breached, with 1.3580/90 as the next resistance. Short-term support is at 1.3410 ahead of 1.3280/00, with US CPI due at 12:30 GMT.

## JPY

Playing JPY from the long side has been challenging. The currency continues to grind lower regardless of news, with intervention expectations looming as we approach the 160 level. I've finally cut all cash positions. While I wouldn't say "Adieu" to the JPY view, I might say "Au revoir" as I take a step back. Net flows remain minimal, and I’m not optimistic about CPI, which seems stale given oil price concerns. Key levels are 159.20/30 as resistance and 157.30 as short-term support.

## CHF

A recovery in risk helped EUR/CHF rally back to the 0.9050 zone. However, I'm struggling to identify a clear trade here. Selling EUR/CHF seems illogical with the SNB flagging concerns about currency strength. I remain flat in CHF, but it’s interesting to note the ongoing systematic demand for the franc.

## AUD

In recent commentaries, I’ve re-engaged in AUD longs, primarily against NZD. The pace of the rally has been surprising. AUD/USD was on a 0.69 handle but has reached levels not seen since July 2022. With the RBA's Hauser delivering what many viewed as a hawkish statement, and local banks predicting a rate hike next week, AUD appears poised for continued outperformance on crosses.

Interestingly, AUD was the second most bought currency by hedge funds yesterday, which was both surprising and encouraging. Given the current volatility, position sizes need to reflect this. With JPMorgan limiting private credit lending after markdowns, stress across markets is evident, and another high beta/risk-off move cannot be ruled out. I retain AUD longs, and consumer inflation expectations will be released this morning, likely garnering more attention than usual.

## CAD

The late New York session brought a flurry of headlines but left FX largely unchanged. After several days of volatile price action, I’m hesitant to hold strong views or add risk at these levels. The CAD outlook remains uncertain, as the loonie has been largely unresponsive to recent oil price movements, with USD/CAD drifting sideways yesterday. Today's focus is on US CPI, but I doubt it will significantly alter the macro narrative, which is still tied to developments in the Middle East.

## SEK & NOK

There are still no signs of de-escalation in the Middle East. While energy markets were somewhat calmed by Trump’s comments about the war nearing an end, reports of the IEA proposing the largest deployment of oil reserves and rumors of US Treasury activity in oil futures keep the situation fluid. 

The Iran conflict has already taken approximately 200 mbd off the market, and while the proposed numbers (300-400 m) are striking, the actual deployment will take time. According to our commodity strategist, only 1.2 mbd will be released, much less than the 20 mbd currently not flowing through the Strait of Hormuz. The question remains: how long will this last? Until we see normal levels of flow through the Strait, which could take months, energy prices will likely remain elevated. 

NOK should continue to outperform, and while a risk-off move could affect it, it should remain insulated on crosses. Moves below 0.9500 in NOK/SEK have been brief, and long positions in this cross remain favorable unless it closes below that level. Any moves towards 11.30 should be faded, although that may not be a concern in the coming sessions.