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JPMorgan FX strategist Sally Auld says the dollar could fall more if ECB, BOJ ease less

What to do with USD ahead of Jackson Hole: JPMorgan

JPMorgan has gone short the dollar against the euro and the yen, but don't blame the greenback.

"It is a view around risks concerning both the ECB and the Bank of Japan next month," Sally Auld, a fixed income and foreign-exchange strategist at JPMorgan, told CNBC's "Street Signs" on Tuesday.

"We broadly see as a range trade for the rest of the year. "

Auld noted that while JPMorgan's economists expected both the BOJ and the European Central Bank would ease at their policy meetings next month, both central bank decisions posed market risks.

"The risks around the calls are not that we're going to get more easing than our economists expect, but that we might actually get less," she said, noting that some central banks may have begun to indicate that unconventional policy measures were nearing the end of the line.

"If we were starting to get a sense that these central banks were really starting to worry that there really wasn't much left in the tank, investors are pretty good at extrapolating small changes in policy into big ones and you could see both euro and yen actually do better against the dollar, " she said.

Auld also noted that she doesn't expect the U.S. Federal Reserve would tighten policy until December, leaving few catalysts to potentially boost the greenback.

To be sure, Auld warned about entering into fresh dollar short positions while heading into the Jackson Hole meeting.

The Federal Reserve Bank of Kansas City's Monetary Policy Symposium at Jackson Hole, Wyoming will be held later this week. The annual Fed symposium has sometimes been used by Fed chairs to make important policy pronouncements.

Fed chief Janet Yellen's speech in Jackson Hole on Friday has been anticipated for weeks, especially after Fed speakers over the past several days suggested the Fed could raise rates as early as September.

Rather than shorting the dollar ahead of the conference, Auld tipped selling against the greenback.

"It doesn't really feel like the right thing to be doing ahead of Jackson Hole is to be initiating fresh U.S. dollar shorts," she said, noting that the dollar actually appeared to be currently trading cheaply against some currencies, such as the yen, where traders already have taken short dollar positions.

The yen has climbed against the dollar so far this year, with the greenback fetching just 100.27 yen at 12:21 p.m. HK/SIN on Tuesday, compared with levels over 120 yen in January.

A magnifying glass is used to inspect newly printed one dollar bills at the Bureau of Engraving and Printing o
Mark Wilson | Getty Images

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—By CNBC.Com's Leslie Shaffer; Follow her on Twitter