Category: EU

  • Euro Vulnerable to US Retail Sales Data – Thursday, 14 May

    Where we are: EUR/USD is trading around 1.1705, holding above yesterday’s close but still capped by the recent three-week high seen last week. The overnight range has been relatively tight, between 1.1690 and 1.1720. A break below 1.1680 would signal a potential retest of the 1.1650 level, while a push above 1.1730 opens the door to 1.1750.

    What’s driving it: The Euro remains sensitive to ECB policy signals after the recent 25bp rate cut to 2.50%. The market is pricing in a near 90% chance of a June rate hike, with three hikes almost fully priced in by the end of 2026. However, the path is not straightforward. ECB speakers like Kazaks are flagging concerns about oil price impacts on inflation expectations, hinting at potential hawkish pushback. The rising US 10Y real yield, now at 1.99%, is a headwind for Euro upside.

    • The mild easing bias preserved in the ECB’s last decision leaves the Euro vulnerable to positive US data surprises, especially given the market’s hawkish pricing.
    • Speculative positioning in the Euro is modestly long, at +32,202 contracts, but this is only at the 10th percentile on a 52-week lookback, suggesting there is limited fuel for a squeeze higher.
    • The rising US 10Y real yield suggests that USD is attractive versus EUR.

    NY session focus: Today’s 08:30 ET release of US Core Retail Sales and Retail Sales m/m will be the key catalyst. A strong print would reinforce expectations of continued Fed hawkishness and likely pressure EUR/USD lower. Watch for initial support at 1.1680, then 1.1650. Conversely, a weak print could see a short squeeze towards 1.1730. The trade that’s working is fading Euro strength, while the trade at risk is being short Euro into a weak US data print. The pain trade for EUR/USD is a surprisingly dovish ECB pivot combined with a US recession scare.

  • DAX 40 Firm Despite Geopolitical Headwinds – Thursday, 14 May

    Snapshot: The DAX is holding gains above 24,400, boosted by sustained optimism in AI and earnings season despite political uncertainties. Declining German HICP inflation to 2% YoY (as of December 2025) is offering the ECB room to maintain its current policy. Today’s catalyst is whether the German index can hold support if US yields continue trending upward.

    • Watch 24,500; a break above confirms the bullish trend.
    • Risk: A reversal in US yields could trigger a DAX correction.

    Bias into NY: Bullish above 24,400, supported by the global chip rally, with Infineon leading the gains. Sustained strength in US real yields above 2% may curb the upside.

  • Euro/Yen Rangebound as BoJ Normalisation Pace Remains Key – Thursday, 14 May

    Snapshot: EUR/JPY is holding steady near 170.20, with the relatively hawkish stance of the Bank of Japan providing underlying support. Masu’s speech early this morning reaffirmed the BoJ’s commitment to monitoring wage growth and its impact on inflation, reinforcing expectations for further policy normalisation. There are no major Eurozone or Japanese data releases before the 08:30 ET US data.

    • Watch for a break above 170.50, which could signal renewed upside momentum driven by carry trades.
    • Risk lies in any dovish shift in BoJ rhetoric or intervention threats from the MoF given sustained Yen weakness.

    Bias into NY: Neutral to slightly bullish on EUR/JPY, targeting a move towards 170.80 if US yields continue their recent ascent and risk sentiment remains stable, though any surprise from this morning’s US data is likely to be a dominant driver.

  • Euro/Pound pressured as UK growth surprises to the upside – Thursday, 14 May

    Snapshot: EUR/GBP is trading near 0.8550, down 0.3% on the session, as this morning’s UK GDP prints beat expectations. The stronger-than-anticipated data suggests the Bank of England may maintain its hawkish stance for longer, as reflected in the vote split.

    • A break below 0.8540 could signal further downside momentum for EUR/GBP, potentially testing the recent lows.
    • Watch for further commentary from BoE members, as well as risk sentiment (VIX at 17.99), which could influence the pair in the NY session.

    Bias into NY: Short EUR/GBP, targeting 0.8520, as the positive UK growth data reinforces the BoE’s cautious approach, creating a divergence from the ECB’s mild easing bias.

  • NY Session Tactical Brief – Wednesday, 13 May

    Regime: Mixed — VIX holding near 18.40 amid rising US real yields, capping risk appetite.

    Today’s market themes:

    • Real-rate repricing: Fed nomination vote and PPI data set to dictate the pace of the climb, pressuring gold and growth stocks.
    • Iran War Impact: Ongoing supply disruptions and inventory depletion boosting oil prices, triggering inventory concerns.
    • Crowded FX positions: Extreme positioning in AUD, NZD, JPY and GBP presents squeeze risks on data surprises.

    The setup: Rising real yields are the dominant force. Focus is on US PPI and the Fed nomination vote today to further define the Fed’s path. Watch for a continued bid in US yields to pressure equities and gold, with DXY bid into the European open. Key is whether 10Y TIPS break 2.00%.

    Watch list (native time per event):

    • 08:30 ET USD: Core PPI m/m (forecast 0.3%, prior 0.1%)
    • 08:30 ET USD: PPI m/m (forecast 0.5%, prior 0.5%)
    • 14:30 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Strong US data supports hawkish Fed, boosting USD.
      • Cross: Risk-off flows and rising US yields underpin the dollar.
      • Levels: Support 117.80, Resistance 118.50.
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Eurozone growth concerns and relatively dovish ECB weigh on EUR.
      • Cross: Stronger USD and widening US-DE yield spread pressure EUR/USD.
      • Levels: Support 1.0760, Resistance 1.0820.
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): BoE easing expectations, pressured by persistent inflation, weigh on the Pound.
      • Cross: Stronger USD and widening US-UK yield spread pressure Cable.
      • Levels: Support 1.2460, Resistance 1.2520.
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ still dovish relative to Fed; intervention risk lingers.
      • Cross: Higher US yields drive USD/JPY higher despite intervention risks.
      • Levels: Support 157.75, Resistance 158.50.
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): WTI price volatility offsets CAD strength from BoC rate cuts.
      • Cross: USD strength and widening US-CA yield spreads favor upside.
      • Levels: Support 1.3650, Resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA easing expectations and weak CPI growth weigh on AUD.
      • Cross: Stronger USD and risk-off sentiment hurt the Aussie.
      • Levels: Support 0.7175, Resistance 0.7225.
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovishness and concerns about domestic demand hurt the Kiwi.
      • Cross: Stronger USD and risk-off sentiment weigh on NZD/USD.
      • Levels: Support 0.5900, Resistance 0.5950.
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB intervention unlikely; Swiss yields remain low.
      • Cross: Risk-off flows less supportive with strong USD driving gains.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish
      • Domestic: Relative CB stance — BoE slightly more hawkish than ECB. BoJ lags both.
      • Cross: DXY strength benefiting JPY crosses, risk tone dictates flows.
      • Levels: EUR/GBP: 0.8510-0.8560, EUR/JPY: 169.00-170.00, GBP/JPY: 192.80-193.80
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields are a significant headwind.
      • Cross: Stronger USD and risk-off environment further pressure Gold.
      • Levels: Support $4,675, Resistance $4,725.
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand is soft, Gold/Silver ratio rising.
      • Cross: Stronger USD and risk-off environment weigh on Silver.
      • Levels: Support $29.00, Resistance $29.50.
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): IEA reports record draw in global oil inventories due to Iran War.
      • Cross: Risk sentiment generally supportive, but DXY strength a cap.
      • Levels: WTI Support $101.00, Resistance $103.00.
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns resurface, LME stocks remain high.
      • Cross: Global growth worries and DXY strength pressure Copper.
      • Levels: Support $5.00, Resistance $5.10.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Higher yields weigh on valuations, focus on earnings.
      • Cross: VIX spikes indicate potential for further downside risk.
      • Levels: Futures support 5200, resistance 5250 (cash: key levels to use).
    • NDX:
      • Direction: Bearish
      • Domestic (US): Mega-cap tech vulnerable to higher real yields.
      • Cross: High rate sensitivity amplifies downside in risk-off environment.
      • Levels: Support 19,500, Resistance 19,700.
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical sector earnings sensitive to rising yields.
      • Cross: Bond yield reaction to data key driver of Dow performance.
      • Levels: Support 39,000, Resistance 39,500.
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength offsetting positive global risk sentiment.
      • Cross: Global risk appetite supports, but US tone a key determinant.
      • Levels: Support 8350, Resistance 8400.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; focus on EU sentiment indicators.
      • Cross: US tech performance influences DAX, DXY strength is a cap.
      • Levels: Support 24,000, Resistance 24,100.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness supports, BoJ policy stance is key.
      • Cross: US tech performance and risk-on sentiment drive Nikkei.
      • Levels: Support 63,000, Resistance 63,500.
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Funding rates remain elevated, ETF flows slowing.
      • Cross: DXY strength and risk-off sentiment hurt Bitcoin. Nasdaq correlation matters.
      • Levels: Support $62,000, Resistance $63,000.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (above 80th percentile), vulnerable to a squeeze on any downside surprises. Crowded shorts in GBP, JPY and NZD present an upside risk.

    The pain trade: A surprise dovish tilt from the Fed on the nomination vote or a much weaker-than-expected PPI print would trigger a short squeeze in crowded USD shorts and boost risk assets, especially the crowded AUD/USD longs.

  • Euro Under Pressure as Rate Cut Speculation Persists – Wednesday, 13 May

    Where we are: EUR/USD is trading around 1.0785, holding above overnight lows but below the prior NY close of 1.0800. The pair has traded in a tight range between 1.0770 and 1.0810 during the European session, showing limited directional conviction ahead of US data. Key support lies at 1.0750, while resistance is seen at 1.0825.

    What’s driving it: The Euro is facing renewed downward pressure as markets continue to digest the ECB’s mild easing bias following last month’s 25bp rate cut to 2.50%. The prospect of further easing in June is keeping a lid on Euro gains, particularly if the wage tracker continues to soften and services HICP remains near 3%. Upward revisions to services inflation or a renewed spike in energy prices would likely prompt the ECB to pause, but the market is leaning towards another cut. Rising US yields are adding to the pressure, with the US 2Y yield at 3.95% and the 10Y at 4.42%, further widening the transatlantic yield differential.

    • ECB’s mild easing bias preserved, keeping the door open for a potential follow-up rate cut in June.
    • Eurozone HICP at 2%, core HICP at 2.3% as of last December, giving doves room to argue for further easing.
    • Speculator positioning in Euro remains modestly long at +32,202 contracts, representing 3.9% of open interest.

    NY session focus: All eyes are on the US data releases at 08:30 ET, with Core PPI and PPI figures expected to show inflationary pressures. A stronger-than-expected print could fuel further dollar strength and push EUR/USD lower towards 1.0750. Keep an eye on the US 10Y real yield which has risen to 1.95% and is acting as a headwind for gold and broader risk sentiment. Later at 14:30 ET, the Fed Chair Nomination Vote is expected to pass without incident, but any surprises could trigger volatility. The trade to watch is short EUR/USD on hawkish data, while the risk is a dovish surprise that triggers a short squeeze. The pain trade is a sustained move above 1.0850.

  • DAX Set to Consolidate Gains Amid Eurozone Inflation Dip – Wednesday, 13 May

    Snapshot: The DAX is trading around 24,060, up 0.5%, supported by receding Eurozone HICP inflation, now at 2.0% YoY. Today’s session will likely be driven by spillover from European markets and risk sentiment into the NY open.

    • Watch for a break above 24,100 to signal further upside momentum.
    • Rising VIX (now 18.38) remains a risk, signaling potential volatility.

    Bias into NY: We favour a neutral-to-bullish bias, contingent on the DAX holding above 24,000. US yields are firming slightly, but receding Eurozone inflation will likely support a stable risk environment, barring any surprises from upcoming US data.

  • Euro/Yen Eyes 170.00 on BOJ Hike Bets – Wednesday, 13 May

    Snapshot: EUR/JPY hovers around 169.75, driven by the persistent expectation of a further BOJ rate hike despite recent ECB easing. Wage data strengthening the case for BOJ normalisation remains the dominant driver. Focus shifts to potential MoF intervention as Yen weakness persists.

    • Watch for a break above 170.00, which would signal renewed upside momentum fueled by widening monetary policy divergence.
    • Risk: Unexpected dovish signals from BOJ officials could trigger a sharp reversal, particularly given stretched Yen short positioning.

    Bias into NY: Bullish EUR/JPY while the BOJ normalisation narrative remains intact and the ECB maintains a mild easing bias; eyeing a test of 170.00. A break above that level would open the path towards 171.00.

  • Euro/Pound Pressure Mounts as BoE Stays Hawkish – Wednesday, 13 May

    Snapshot: EUR/GBP is trading near 0.8535, slightly lower on the session. The hawkish undertones from the Bank of England, underscored by the 8-1 vote split at the last meeting, are weighing on the cross. Focus shifts to any remarks regarding the near-term outlook.

    • A break below 0.8520 could open the door to further downside.
    • Watch for any comments from BoE officials that might clarify their rate path ahead of the next meeting on May 8th.

    Bias into NY: We see further downside risk for EUR/GBP as long as the BoE maintains its cautious stance; a test of 0.8500 is likely. While the ECB is likely to ease further, the BoE’s reluctance to commit to cuts should continue to support Sterling, with broader dollar strength providing only a secondary tailwind.

  • NY Session Tactical Brief – Tuesday, 12 May

    Regime: Risk-off, driven by stronger-than-expected US CPI data and escalating Middle East tensions, pushing the VIX higher and US 10Y yields up 5bp to 4.43%.

    Today’s market themes:

    • Real-rate repricing: Hotter CPI print fuels hawkish Fed bets, pressuring risk assets.
    • Geopolitical risk: Iran war uncertainty keeps oil elevated, supporting inflation concerns.
    • Crowded shorts: Potential for squeeze in JPY, GBP, and NZD if risk sentiment improves.

    The setup: The stronger-than-expected US CPI print has triggered a hawkish repricing of Fed expectations, sending US yields higher and the dollar stronger. This is pressuring risk assets, particularly tech and emerging markets. The trade is to fade rallies in risk assets, but watch for potential short squeezes in crowded short currencies if geopolitical risks abate or US data disappoints. US 10Y at 4.43%, DXY at 98.25.

    Watch list (native time per event):

    • 08:30 ET USD: Core CPI m/m (forecast 0.3%, prior 0.2%)
    • 11:59 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)
    • 11:30 AEST AUD: Wage Price Index q/q (forecast 0.8%, prior 0.8%)

    Bias by asset:

    STRICT SILO RULE: For every non-USD asset, the Domestic line MUST contain only domestic content (home central bank / domestic data / domestic yield / domestic political-fiscal driver). USD, DXY, Fed, US yields, and risk regime go in the Cross line — never in Domestic. If no fresh domestic catalyst exists, write “No fresh domestic catalyst — sensitive to US response” in Domestic. For commodities, Domestic = real-yields / supply / inventories / flows. For BTC, Domestic = funding / ETF flow / on-chain.

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Hawkish Fed repricing on CPI beat. Rising US yields support.
      • Cross: Risk-off flows, safe-haven demand, EM weakness.
      • Levels: Resistance at 98.50, support at 98.00.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, widening US-DE 10Y yield spread, risk-off sentiment.
      • Levels: Resistance at 1.0800, support at 1.0750.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): Rising UK borrowing costs pressure.
      • Cross: Stronger DXY, widening US-UK 10Y yield spread, risk aversion.
      • Levels: Resistance at 1.3550, support at 1.3500.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ remains dovish. Intervention risk looming.
      • Cross: Higher US 10Y yields, strong DXY, risk-off bids into USD.
      • Levels: Resistance at 158.00, support at 157.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, US-CA 10Y yield spread widening.
      • Levels: Resistance at 1.3750, support at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Awaiting Wage Price Index data.
      • Cross: Stronger DXY, US-AU 10Y yield spread widening, risk aversion.
      • Levels: Resistance at 0.7220, support at 0.7175.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ easing bias remains in place.
      • Cross: Stronger DXY, US-NZ 10Y yield spread widening, risk-off flows.
      • Levels: Resistance at 0.5960, support at 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, waning safe-haven appeal of CHF.
      • Levels: Resistance at 0.7820, support at 0.7780.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bearish, GBP/JPY: Bearish.
      • Domestic: Relative central bank policy divergence remains key driver.
      • Cross: DXY strength supports JPY and GBP.
      • Levels: Monitor individual cross support/resistance.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields pressure gold.
      • Cross: Stronger DXY, risk-off flows less supportive with rates rising.
      • Levels: Resistance at $4,720, support at $4,680.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): No fresh catalyst — sensitive to overall risk tone.
      • Cross: Stronger DXY, risk-off sentiment, industrial demand concerns.
      • Levels: Monitor gold for direction, lower volatility.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply disruption fears, escalating geopolitical tensions.
      • Cross: Weaker DXY provides some support, but risk-off a headwind.
      • Levels: Watch for Iran ceasefire news.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh.
      • Cross: Stronger DXY, global growth proxy suffers from risk-off sentiment.
      • Levels: Monitor China data.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Higher yields, earnings rotation away from growth.
      • Cross: Elevated VIX, global risk-off sentiment.
      • Levels: Futures at 5185. Support at 5170, resistance at 5200.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Sensitive to real yields, mega-cap earnings under pressure.
      • Cross: Rates sensitivity, VIX elevation.
      • Levels: Monitor tech stocks for price action.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Financials and industrials facing mixed earnings.
      • Cross: Bond-yield reaction muted.
      • Levels: Trading near flatline, awaiting catalyst.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Weaker Sterling, higher Gilt yields.
      • Cross: Global risk, US tone negative.
      • Levels: Trading lower in Europe.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech weakness, stronger DXY, risk aversion.
      • Levels: Trading lower on lack of drivers.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY weakness capped by intervention risk.
      • Cross: US tech selling pressure, risk off.
      • Levels: High close, vulnerable to correction.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates easing, ETF flows slowing.
      • Cross: Stronger DXY, risk aversion, Nasdaq correlation.
      • Levels: Finding soft support after overnight retreat.

    Positioning watch: CFTC data shows crowded longs in AUD, USD, Copper, and Bitcoin, creating potential downside risk if data disappoints or risk sentiment shifts. Crowded shorts in JPY, GBP, and NZD present squeeze potential if risk appetite recovers.

    The pain trade: A surprise dovish signal from the Fed Chair Nomination Vote, coupled with weaker-than-expected US data later in the week, would trigger a sharp short squeeze in JPY, GBP, and NZD, while simultaneously hammering the USD.

  • Euro Under Pressure as US CPI Looms Large – Tuesday, 12 May

    Where we are: EUR/USD is trading around 1.0785, having drifted lower in early European trade. The pair remains below the 1.08 handle after failing to sustain a rally overnight, trading in a narrow range. This is slightly below yesterday’s New York close.

    What’s driving it: The dominant driver for the Euro remains the anticipation surrounding this morning’s US CPI print. While the ECB cut rates by 25bp to 2.50% at its last meeting, maintaining a mild easing bias, a hot US CPI could significantly curtail further ECB action by driving up the dollar and imported inflation. Frank Elderson’s speech earlier today, focusing on deeper integration for boosting prosperity, hasn’t provided any immediate support to the Euro. Domestically, Eurozone HICP remains at 2%, with Core at 2.3%, hardly giving the ECB cause for concern but lagging the US on an equivalent basis.

    • ECB cut rates 25bp last month, but is proceeding cautiously.
    • US 10Y Breakeven Inflation is creeping up to 2.47%, putting pressure on the ECB’s dovish stance.
    • Speculator positioning in the Euro is modestly long (3.9% of OI) but not at an extreme, reducing short-squeeze potential if the CPI comes in soft.

    NY session focus: All eyes are on the 08:30 ET US CPI release. Forecasts point to a 3.7% YoY increase, with Core at 0.3% m/m. A higher-than-expected print will likely send EUR/USD below 1.0750, potentially testing the 1.07 level. Conversely, a soft print could fuel a rally towards 1.0850. Traders should also monitor the 11:59 ET Fed Chair Nomination Vote. The trade that’s working is shorting EUR/USD on rallies. The trade at risk is being long EUR/USD ahead of the CPI data. The pain trade is a weak CPI print coupled with dovish commentary from the Fed nominee, triggering a significant short squeeze in the Euro.

  • DAX Under Pressure as Rate-Cut Hopes Fade – Tuesday, 12 May

    Snapshot: The DAX is currently trading around 24,100, down roughly 1% on the session, pressured by a lack of fresh domestic catalysts and lingering worries over Middle East tensions. Focus remains on the ECB’s communication around future rate paths. Today’s catalyst will be how US markets digest the existing uncertainty.

    • Watch 24,000 as initial support; a break there opens the door to further downside.
    • Geopolitical risk remains elevated, with any escalation in the Middle East likely to trigger further risk-off sentiment in the NY session.

    Bias into NY: Bearish. The lack of domestic upside drivers coupled with the prevailing risk-off mood suggests further pressure on the DAX, potentially testing the 23,800 level.

  • Euro/Yen Range-Bound as BoJ Normalisation Patience Persists – Tuesday, 12 May

    Snapshot: EUR/JPY is holding steady near 169.50, little changed on the session. The lack of urgency from the Bank of Japan regarding further policy tightening is keeping the Yen side heavy. No fresh catalysts expected before 08:30 ET US data.

    • Watch 170.00; a break could trigger a test of recent highs.
    • Rising US breakevens could offer some support, however further BoJ rhetoric cannot be discounted.

    Bias into NY: Mildly bullish EUR/JPY, targeting 170.00 contingent on risk appetite holding; BoJ’s summary of opinions from the April meeting reiterated a cautious approach, allowing Euro strength to shine. US 10Y yields have been drifting lower, supporting the bid.

  • Euro/Pound Pressured by Diverging Rate Outlook – Tuesday, 12 May

    Snapshot: EUR/GBP is trading near 0.8530, pressured by the divergence in central bank policy outlooks. The Bank of England’s reluctance to cut rates, driven by sticky services inflation, contrasts with the ECB’s mild easing bias following the recent 25bp cut. Today’s session will focus on any further hints from ECB speakers regarding the path of future rate adjustments.

    • Key level to watch: 0.8500 support
    • Risk: Unexpected shift in BoE rhetoric towards a more dovish stance, potentially sparked by downside surprises to backward looking data.

    Bias into NY: Short EUR/GBP, targeting a break below 0.8500, as the BoE’s comparatively hawkish stance keeps Sterling supported against the backdrop of a still dovish ECB. US 10Y real yields stabilising after the recent dip provide a mild headwind to the Euro.

  • NY Session Tactical Brief – Monday, 11 May

    Regime: Risk-off, with oil spiking on escalating Middle East tensions and Trump rejecting Iran’s peace offer, VIX at 17.08 and 10Y yields slightly higher.

    Today’s market themes:

    • Geopolitical Risk: Middle East tensions driving oil and safe-haven flows.
    • Rate Divergence: CB policy driving FX crosses, particularly EUR/GBP and EUR/JPY.
    • Commodity Strength: Silver and Copper continue to show strong performance.

    The setup: Geopolitical tensions are escalating quickly, pushing oil higher and boosting safe-haven demand. The market is pricing in a higher risk of supply disruptions from the Middle East. Watch for further headlines as the situation develops; a break above $105 in Brent could trigger a larger risk-off move. US 10Y yield is at 4.393%.

    Watch list (native time per event):

    • 09:30 CST CNY: CPI y/y (forecast 0.9%, prior 1.0%)
    • 09:30 CST CNY: PPI y/y (forecast 1.7%, prior 0.5%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed watching data; US yields steady
      • Cross: Geopolitical risk-off; Euro weakness capping upside
      • Levels: Support: 97.80, Resistance: 98.03
    • EUR/USD:
      • Direction: Down
      • Domestic (EU): ECB divergence widening vs BoE and Fed
      • Cross: DXY strength / US-DE 10Y spread widening / Risk-off
      • Levels: Support: 1.1749, Resistance: 1.1782
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE hawkish hold / higher Gilt yields supporting
      • Cross: DXY / US-UK 10Y spread / Risk-off offsets domestic strength
      • Levels: Support: 1.3570, Resistance: 1.3616
    • USD/JPY:
      • Direction: Up
      • Domestic (JP): BoJ dovish / JGB yields capped / Intervention watch
      • Cross: Higher US 10Y yield / DXY / risk regime
      • Levels: Support: 156.76, Resistance: 157.18
    • USD/CAD (Loonie):
      • Direction: Up
      • Domestic (CA): BoC dovish / WTI strength offset by CAD weakness
      • Cross: DXY / US-CA 10Y spread
      • Levels: Support: 1.3661, Resistance: 1.3695
    • AUD/USD (Aussie):
      • Direction: Down
      • Domestic (AU): RBA neutral / China data sensitivity
      • Cross: DXY strength / US-AU 10Y / China growth uncertainty
      • Levels: Support: 0.7220, Resistance: 0.7249
    • NZD/USD (Kiwi):
      • Direction: Down
      • Domestic (NZ): RBNZ dovish / dairy prices lackluster
      • Cross: DXY strength / US-NZ 10Y / risk-off sentiment
      • Levels: Support: 0.5939, Resistance: 0.5957
    • USD/CHF (Swissy):
      • Direction: Up
      • Domestic (CH): SNB dovish / Swiss yields low
      • Cross: DXY strength / safe-haven unwinding
      • Levels: Support: 0.7774, Resistance: 0.7795
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Down; EUR/JPY: Up; GBP/JPY: Up
      • Domestic: EUR/GBP: BoE vs ECB; EUR/JPY & GBP/JPY: rate divergence
      • Cross: DXY / risk regime / cross-of-crosses dynamics
      • Levels: EUR/GBP: 0.8647/0.8668; EUR/JPY: 184.39/185.02; GBP/JPY: 212.73/213.87
    • XAU (Gold):
      • Direction: Down
      • Domestic (asset-specific): Rising real yields / ETF outflows
      • Cross: DXY strength / risk-off demand limited
      • Levels: Support: 4655.6, Resistance: 4714.2
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand / Gold strength
      • Cross: DXY / risk regime
      • Levels: Support: 7953.000, Resistance: 8418.000
    • WTI / Brent:
      • Direction: Up
      • Domestic (asset-specific): Geopolitical risk / potential supply disruption
      • Cross: DXY / risk regime
      • Levels: WTI: Support: 96.64, Resistance: 100.35; Brent: Support: 102.90, Resistance: 105.97
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China stimulus / LME stock levels
      • Cross: DXY / global growth proxy
      • Levels: Support: 625.4000, Resistance: 641.4300
    • SPX:
      • Direction: Down
      • Domestic (US): higher yields / earnings plateau
      • Cross: VIX rising / global risk aversion
      • Levels: Futures support: 7391.00, Resistance: 7420.25, Cash support: 7398.90
    • NDX:
      • Direction: Down
      • Domestic (US): Real yields / AI bubble potential
      • Cross: Rates sensitive / Rising VIX
      • Levels: Futures support: 29227.50, Resistance: 29399.25
    • US30 (Dow):
      • Direction: Down
      • Domestic (US): Cyclical rotation out / yields impact
      • Cross: bond-yield reaction
      • Levels: Futures support: 49471, Resistance: 49706
    • UK100 (FTSE):
      • Direction: Down
      • Domestic (UK): Sterling strength / Gilt yields rising
      • Cross: global risk aversion / US tone
      • Levels: Support: 22742, Resistance: 22850
    • DAX:
      • Direction: Down
      • Domestic (DE): Lower Bund yields / weaker outlook
      • Cross: US tech weakness / DXY / risk regime
      • Levels: Support: 24204, Resistance: 24362
    • Nikkei:
      • Direction: Down
      • Domestic (JP): Strong JPY / JGB yields rising slightly
      • Cross: US tech weakness / risk regime
      • Levels: Support: 62393, Resistance: 63385
    • BTC:
      • Direction: Down
      • Domestic (asset-specific): Crowded longs / Funding rates high
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support: 62393, Resistance: 63385

    Positioning watch: AUD/USD and Bitcoin are crowded longs (96th and 83rd percentile, respectively), making them vulnerable to a squeeze lower on any disappointment or USD strength. GBP and JPY are crowded shorts, a positive surprise could trigger a squeeze higher.

    The pain trade: A surprise de-escalation in Middle East tensions combined with a dovish signal from the Fed would trigger a massive short squeeze in USD/JPY and GBP/USD, while simultaneously crushing oil prices and unwinding crowded long positions in AUD and BTC.