Short The Dollar, Back The Yen: Analyst Offers Strategy As 'Breadth Of Tariffs Increase Recession Risks'

JPMorgan's Meera Chandan is doubling down on the dollar's downfall and placing a bullish bet on the Japanese yen.

What Happened: President Donald Trump's reciprocal tariffs plunge stocks into the red, there are growing concerns that a recession is possible.

“The breadth and size of tariffs have increased recession risks,” Chandan said. “Growth is at risk everywhere, including the US.”

According to Chandan, the currency market is waking up to a stagflationary cocktail: weakening U.S. growth paired with persistent inflation. That combo is taking a bite out of real yields and the greenback’s allure. As equity allocations fall and capital rethinks its destination, the U.S. dollar is losing its shine.

Chandan sees this as a moment to stay firmly bearish on the dollar, particularly against defensive currencies like the Japanese yen and the euro. But while both offer refuge, she prefers the yen for its relative value. Chandan favors the Japanese yen among traditional reserve currencies, calling it a cheaper defensive option than the Swiss franc.

The technical picture backs her up. With U.S. real yields sliding and equity investors heading for the exit, the yen’s low yield becomes a feature, not a bug. Chandan isn't just skeptical of the dollar — she's positioning to profit from its pain.

Her strategy includes staying short USD/JPY and loading up on cross-yen shorts like EUR/JPY, NZD/JPY, and CHF/JPY.

How To Play It

Retail investors looking to follow Chandan's lead might explore the Invesco CurrencyShares Japanese Yen Trust FXY for direct exposure to yen strength, or ProShares Short U.S. Dollar ETF DOG for a broader USD bearish bet.

Meanwhile, those hoping to catch the potential euro tailwind might consider Invesco CurrencyShares Euro Trust FXE.

With U.S. yields buckling under stagflation pressure, Chandan says it's time to cozy up to the yen. The dollar's safe-haven status? Not so safe anymore.

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