Synopsis:

Société Générale refrains from recommending explicit short USD positions for now, citing policy-driven disruption in FX markets. Instead, they favor tactical long AUD and short CHF exposure, anticipating benefits from trade thaw and reduced geopolitical tension.

Key Points:

• USD view neutral for now: Despite President Trump’s desire for a weaker dollar and rising US yields, SocGen expects EUR/USD and USD/JPY to stay range-bound until late summer.

• Market uncertainty: Disconnected relationships between FX and rate differentials—similar to 2022—suggest traders are reacting more to political signals than fundamentals.

• AUD bullish bias: SocGen favors being long AUD amid signs of improving US-China trade dynamics.

• CHF bearish bias: Recommends short CHF positioning, expecting a decline in safe-haven demand as geopolitical risk potentially eases.

Conclusion:

SocGen avoids a direct USD short stance but sees selective opportunities: long AUD as trade tensions ease and short CHF as geopolitical risk subsides. Broader USD weakness is more likely after the summer once clearer policy and data signals emerge.