Global FX: Interrogating the optimistic baseline
J.P. Morgan's recent commentary reflects a cautious examination of the prevailing narrative suggesting a bullish outlook for global economies and a concurrent bearish stance on the U.S. dollar. Given the landscape of erratic U.S. equity markets, fluctuations in industrial commodities, and geopolitical tensions, the team emphasizes the need for careful scrutiny of the assumptions underlying the optimistic baseline forecast for the dollar. They argue that the prevailing volatility in financial markets necessitates a thorough evaluation of the sustainability of this bullish outlook.
What the desk is arguing
J.P. Morgan presents an interrogation of the optimistic narrative surrounding the U.S. dollar, suggesting that this narrative may be overly reliant on favorable cyclicality amid significant market volatility. The analysts point to the turbulence in U.S. equities, alongside unstable industrial commodity prices, as critical factors challenging the assumption of sustained dollar weakness.
Furthermore, the geopolitical landscape adds another layer of complexity that could undermine the dollar’s bearish outlook. By refusing to take the optimistic baseline at face value, J.P. Morgan underscores the importance of revisiting fundamental data and market signals to assess whether the current narrative holds under pressure.
Where it sits in our coverage
Our consensus target for the U.S. dollar remains at 1.075, with a firm spread indicating a range between 1.04 and 1.12. This perspective aligns with J.P. Morgan's belief that the dollar faces challenges, while still keeping within a range driven by cyclical dynamics.
In terms of specific firm forecasts, we note the following insights:
- **JPMorgan**: Target of 1.10 for Mar26. - **Goldman Sachs**: Target of 1.08 for Dec26. - **Citi**: Target of 1.06 for year-end 2026.
How other firms see it
While J.P. Morgan offers a critical lens on the optimistic baseline narrative, other firms hold varying perspectives. For instance, **BofA** maintains a contrary view, advocating for a stronger dollar and setting a target at 1.04 for Mar26.
In contrast, firms like **Goldman Sachs** and **Citi** align more closely with the cautious stance taken by J.P. Morgan, indicating that they see potential vulnerabilities for the dollar given current market conditions. Their forecasts reflect a more tempered approach amid ongoing volatility in financial markets.
- **BofA**: Target of 1.04 for Mar26 (contrary) - **Goldman Sachs**: Target of 1.08 for Dec26 (aligned) - **Citi**: Target of 1.06 for Dec26 (aligned)
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01J.P. Morgan challenges prevailing dollar bearish narratives amidst market turbulence.
- 02Geopolitical issues and volatility in commodities further complicate the outlook.
- 03Need for reevaluation of assumptions propelling the dollar's weakness in light of recent market movements.
Market implications
The recent commentary from J.P. Morgan implies that currency markets should brace for potential fluctuations should the underlying assumptions of dollar weakness falter. Increased scrutiny on economic indicators and geopolitical events could dictate short-term volatility, especially if further turbulence emerges in equity or commodity markets.
Risks to this view
Key risks to this analysis include further deterioration in U.S. economic indicators that might strengthen the dollar, as well as unexpected geopolitical developments that could drive market sentiment. Additionally, persistent volatility in equity and commodity markets poses a risk to the stability of the current dollar narrative.
Arindam Sandilya, Junya Tanase, James Nelligan and Patrick Locke stress test the cyclically constructive, dollar bearish baseline narrative in light of ongoing volatility in US equities, industrial commodities and geopolitical ructions. This podcast was recorded on 20 February 2026. This communication is provided for information purposes only.
Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-5208833-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2026 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P.
Morgan. It is strictly prohibited to use or share without prior written consent from J.P. Morgan any research material received from J.P.
Morgan or an authorized third-party (“J.P. Morgan Data”) in any third-party artificial intelligence (“AI”) systems or models when such J.P. Morgan Data is accessible by a third-party
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