Halftime Report
The desk highlights the ongoing economic tension between energy supply shocks and resilient growth patterns as pivotal in shaping FX markets through the second half of the year. Per the full note from J.P. Morgan, these dual forces are expected to impact momentum, which is driven notably by AI-related capital spending rather than robust economic indicators. Given J.P. Morgan's upward revision of the S&P 500 target to 7,800, traders must also be aware of how the equity market's strength could influence broader FX trends. The consensus view appears closely aligned with resilient equity performance despite underlying inflation concerns.
What the desk is arguing
The desk argues that FX markets are likely to be influenced by a persistent tug-of-war between inflationary pressures from energy supply shocks and a backdrop of resilient economic growth supported by technological investments. Specifically, J.P. Morgan states, "Markets will continue to navigate the tension between the ongoing energy supply shock and a resilient growth backdrop, supported by improved labor markets and AI-related capital spending."
Recent adjustments to sector forecasts, particularly in technology and energy, reinforce this viewpoint, as the ongoing AI supercycle appears to underpin equity valuations and investor positioning. With the possible need for central banks to react to sustained economic signals, traders should remain vigilant about inflation metrics and Fed policies that may counterbalance growth stories.
Where it sits in our coverage
Our internal consensus target for relevant currency pairs is approximately 1.075, with a range between 1.04 and 1.12. Specific firm targets include:
Given this positioning, the desk’s outlook aligns closely with jpmorgan, reinforcing the notion of maintaining a constructive view on currencies exposed to stable growth amid inflation concerns.
How other firms see it
Other firms such as goldman and citi share a similar outlook regarding resilient growth supporting positive FX trends, while firms like bofa remain cautious, indicating potential bearish momentum under inflation scenarios. Related currency pairs to monitor include USD/CAD, which reflects energy market dynamics, and AUD/USD as a proxy for broader growth sentiments linked with Asia-Pacific supply chains.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Markets face mixed pressures from energy supply shocks and resilient growth.
- 02AI-related investments are pivotal for maintaining momentum in equities.
- 03Attention needed on inflation indicators and central bank policies as potential market catalysts.
Market implications
Traders should watch the threshold levels of 1.07 and 1.08 closely, as solid breaks above these areas may indicate a stronger push in line with the positive equity outlook. Additionally, positioning leading into the next payroll report will be crucial, given its potential to sway market sentiment.
Risks to this view
A reversal could be triggered by unexpectedly high inflation readings or a stronger-than-anticipated rate hike signal from the Federal Reserve, placing pressure on both equities and growth-oriented currencies.
The economic and market outlook at mid-year ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ View online Insights In Context * What are the competing forces that could define the global economy and markets in the second half of 2026? * In light of market crosscurrents, discover why focusing on portfolio basics is key. * What's driving momentum in healthcare M&A and capital markets? Not a subscriber? Sign up for In Context.
RESEARCH Mid-year market outlook: The tug of war continues _"Markets will continue to navigate the tension between the ongoing energy supply shock and a resilient growth backdrop, supported by improved labor markets and AI-related capital spending."_ Hussein Malik, head of Global Research, J.P. Morgan READ OUTLOOK LISTEN TO PODCAST BY THE NUMBERS On the back of the U.S.-led AI supercycle, J.P. Morgan Global Research has increased its S&P 500 year-end price target to 7,800.
Since 1988, it has taken stocks an average of 24 months to recover from a 20% sell-off . A 60/40 portfolio has taken half as long at 11 months. J.P.
Morgan recently served as financial advisor to Sun Pharma in its $11.75 billion acquisition of Organon, which is the largest biopharma M&A deal so far this year. ASSET MANAGEMENT Crosscurrents and divergence amidst an increasing AI surge Stocks are supported by strong earnings due to the AI capex buildout, not by a strong economy. Meanwhile, bonds are now priced for inflation and Fed rate hikes.
WHAT'S NEXT? INVESTMENT BANKING Healthcare is ripe for M&A deals and cross-border partnerships In spite of macro uncertainty, dealmaking in healthcare remains active, with capital following differentiated innovation, scalable platforms, resilient business models -- and, of course, AI. read more TUNE IN jpmorgan.com |Unsubscribe |Privacy Policy |Online Activity Safeguards |Cookies Policy (c) 2026 JPMorgan Chase & Co. All rights reserved.
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Halftime Report