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July 2026

FXJ Model Portfolio — July 2026

Quarterly rebalance: rotating into momentum FX pairs as USD weakens ahead of Fed pivot

Lead Commentary

Navigating the Dollar Crossroads: Our Q3 Rebalance

The Federal Reserve's signals of a potential rate pause in September have materially shifted the macro landscape for currency traders. Dollar-denominated pairs are experiencing a period of elevated directional uncertainty, creating exactly the kind of asymmetric opportunity our model portfolio is designed to exploit.

This month we are rotating a portion of our EUR/USD and GBP/USD exposure into higher-beta EM pairs, specifically USD/MXN and AUD/JPY, where carry dynamics are still compelling. We are simultaneously trimming our long Gold position as real yields stabilize.

Our signal providers have delivered an aggregate of +8.3% since the June rebalance, led by the EUR/GBP short thesis that played out across three weeks of sustained Sterling underperformance.

Key Points This Month

  • Fed pause expectations weigh on DXY through Q3
  • EM carry still attractive — targeting MXN, BRL and ZAR longs
  • Commodity currencies — AUD, CAD — benefiting from oil and metals stabilization
  • JPY watching: BoJ policy normalization remains the key wildcard
  • Tactical Gold trim after the $2,400 resistance test

Themes This Month

  1. USD softening as rate differentials compress
  2. Risk-on positioning across AUD, NZD and EM pairs
  3. EUR/GBP directional trade on UK inflation surprise
  4. Carry trade revival: JPY funding pairs in focus
  5. Commodity FX catching a bid on China stimulus

Portfolio Allocation

Positions

10

Period

July 2026

Portfolio Holdings

Prices as of July 2026.

Ticker Name Price Target Weight
EUR/USD Euro / US Dollar 1.0923 1.115 18%
GBP/USD Sterling / US Dollar 1.2741 1.31 12%
USD/JPY US Dollar / Japanese Yen 157.4 152 10%
AUD/JPY Aussie / Japanese Yen 101.22 105.5 10%
USD/MXN US Dollar / Mexican Peso 17.63 16.8 8%
EUR/GBP Euro / Sterling 0.8578 0.84 8%
XAU/USD Gold / US Dollar 2381 2500 10%
GER40 DAX 40 Index 18442 19300 7%
AUD/USD Aussie / US Dollar 0.6618 0.69 10%
USD/CAD US Dollar / Canadian Dollar 1.3612 1.33 7%

Position Commentary

Long EUR/USD on Fed pivot narrative and ECB resilience

The ECB has held rates steady while the Fed is signaling a pause. This divergence should compress USD strength gradually into year-end. We target the 1.1150 level on a 3-month horizon. Position size remains at 18% — our core long. Stop at 1.0780.

FXJ Portfolio Verdict

The July rebalance positions us defensively against a stronger Dollar while maintaining participation in risk-on EM and commodity FX pairs. The USD/JPY short and EUR/USD long are our two highest-conviction trades into the Q3 Fed meeting. We are monitoring UK inflation data closely for our EUR/GBP position. Overall portfolio beta to DXY remains negative — our preferred stance until the September FOMC decision.