Category: EU

  • EUR/USD Consolidates Near Highs, ECB Easing Still In Play – Monday, 11 May

    Where we are: EUR/USD is currently trading at 1.1769, up +0.06% on the day and near the upper end of today’s 1.1749-1.1782 range. The pair is holding its gains from late last week, consolidating above the 1.1750 level and slightly above the prior NY close.

    What’s driving it: The Euro is finding some support as markets price in at least two ECB rate hikes for 2026, with money markets indicating over a 78% probability of the first hike in June. However, the ECB’s latest decision to cut rates by 25bp in April and maintain a mild easing bias continues to hang over the currency. The Bund 10Y yield is up slightly at 3.040%, but the substantial US-DE 10Y yield spread of +135bp continues to favour the Dollar, limiting Euro upside. DXY remains steady at 97.87.

    • ECB President Lagarde on Friday reiterated the central bank’s readiness to act swiftly if necessary, though this hasn’t prevented markets from pricing in further easing down the line.
    • Reuters reported that ECB’s Kocher sees a rate move if the inflation outlook does not improve.
    • Speculator positioning in EUR is modestly long at +32,202 contracts, near the 10th percentile of its 52-week range, suggesting room for further long build if momentum picks up, but also potential for downside if the narrative shifts.

    NY session focus: With no major Eurozone data releases scheduled for today, the focus will be on US yields and risk sentiment as the New York session gets underway. Watch for any significant moves in the US 10Y yield which currently sits at 4.393%. Key levels to watch on EUR/USD are 1.1785 as initial resistance and 1.1740 as initial support. The trade that’s working is a cautious long in EUR/USD above 1.1750, but it’s at risk if the Dollar bid returns and risk aversion rises. The pain trade for EUR/USD would be a break below 1.1700, triggering a quick unwind of existing long positions.

  • DAX Faces Pressure as ECB Rhetoric Counters Rate Cut Hopes – Monday, 11 May

    Snapshot: The DAX is currently at 24265, down 68 points or -0.28%. Hawkish comments from ECB’s de Guindos in the Financial Times, suggesting the central bank remains cautious about easing too quickly, are weighing on the index. This counters earlier expectations of accelerated rate cuts following recent inflation data.

    • Watch 24200; break opens path to 24100.
    • Rising crude oil prices and ongoing US-Iran tensions amplify inflation concerns; potential for a risk-off move into the NY session.

    Bias into NY: Expect continued pressure on the DAX, targeting a move toward 24200, if ECB concerns about inflation persist into the US open. The firmer US 10Y yield, currently at 4.393%, could further weigh on sentiment, especially if equities and bonds trade with positive correlation.

  • EUR/JPY Bulls Test 185.00 as BoJ Hike Looms – Monday, 11 May

    Snapshot: EUR/JPY currently trades at 184.91, up 0.28% on the day, as Eurozone rates trajectory diverges from that of Japan. With the ECB indicating mild easing bias, including a potential follow-up cut on wage tracker softening, the pair has bid to session highs. Traders will watch comments from ECB policymakers for hawkish pushback.

    • Breach of intraday high (185.02) would open further upside; prior intervention zone above at 186.00.
    • Risk lies in sudden JPY strength should BoJ signal more aggressive tightening.

    Bias into NY: Bullish EUR/JPY, targeting 185.50, supported by dovish ECB guidance, unless USD strengthens significantly after US session open.

  • Euro/Sterling range-bound on rate divergence, UK wages in focus – Monday, 11 May

    Snapshot: EUR/GBP trades at 0.8650, down 0.20% on the session, pinned by the rate divergence between the ECB and BoE. De Guindos’s FT interview overnight offered no fresh catalyst. Watch for further direction from UK wage data later in the week.

    • Key level: 0.8647 represents the lower bound of today’s range; breach opens a test of 0.8620.
    • Risk: Upside surprise in UK wages could fuel further Sterling strength, potentially squeezing EUR/GBP shorts.

    Bias into NY: Favor selling rallies toward 0.8670, targeting a retest of the 0.8640 area, given the BoE’s current hawkish stance relative to the ECB and the potential for hawkish UK wage surprises. DXY strength amplifies downside risk.

  • NY Session Tactical Brief – Friday, 8 May

    Regime: Risk-on, as equity futures surge on hopes of softer US payrolls and bond yields drift lower (US 10Y at 4.357%).

    Today’s market themes:

    • US Payrolls showdown: markets bracing for a potential dovish surprise amid a crowded USD long positioning.
    • Iran tensions: Oil prices remain volatile amid geopolitical instability and supply concerns.
    • Central Bank Divergence: Focus on Lagarde and Bailey speeches while watching BoJ comments regarding JPY.

    The setup: The market is pricing in a weaker-than-expected US jobs report, fueling a rally in risk assets. The crowded USD long position leaves room for a significant squeeze if the data disappoints. Watch US 10Y yield response to payrolls and the DXY level around 97.77.

    Watch list (native time per event):

    • 08:30 ET USD: Non-Farm Employment Change (forecast 65K, prior 178K)
    • 08:30 ET CAD: Employment Change (forecast 12.9K, prior 14.1K)
    • 13:20 London GBP: BOE Gov Bailey Speaks

    Bias by asset:

    • DXY:
      • Direction: Bearish.
      • Domestic (US): Fed policy outlook dependent on US data, especially labor market.
      • Cross: Risk sentiment dependent on USD strength, FX cross flows.
      • Levels: Support at 97.50, resistance at 98.20.
    • EUR/USD:
      • Direction: Bullish.
      • Domestic (EU): ECB’s rhetoric, core inflation and German Bund yields.
      • Cross: DXY weakness, US-DE 10Y spread favoring EUR, positive risk sentiment.
      • Levels: Support at 1.1700, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Bullish.
      • Domestic (UK): BoE policy guidance, Gilt yields, services CPI.
      • Cross: DXY weakness, US-UK 10Y spread, risk on sentiment.
      • Levels: Support at 1.3550, resistance at 1.3650.
    • USD/JPY:
      • Direction: Neutral.
      • Domestic (JP): BoJ policy, JGB yield curve control, intervention threat.
      • Cross: US 10Y yields, DXY direction, risk appetite.
      • Levels: Support at 156.00, resistance at 157.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): BoC policy, Employment change data and WTI correlation.
      • Cross: DXY direction, US-CA 10Y yield spread.
      • Levels: Support at 1.3600, resistance at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bullish.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, US-AU 10Y spread, China growth outlook.
      • Levels: Support at 0.7200, resistance at 0.7250.
    • NZD/USD (Kiwi):
      • Direction: Bullish.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, US-NZ 10Y spread, risk appetite.
      • Levels: Support at 0.5900, resistance at 0.5975.
    • USD/CHF (Swissy):
      • Direction: Bearish.
      • Domestic (CH): SNB stance and Swiss yield curve.
      • Cross: DXY weakness, safe-haven demand.
      • Levels: Support at 0.7750, resistance at 0.7810.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish.
      • Domestic: Relative CB policy, relative yield spreads drive direction.
      • Cross: DXY, risk regime, cross-of-crosses dynamics.
      • Levels: Watch key technical levels, sensitive to GBP and JPY crosses.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Real yields trending lower, rising breakevens, central bank demand.
      • Cross: DXY weakness, risk-off sentiment.
      • Levels: Support at 4700, resistance at 4750.
    • XAG (Silver):
      • Direction: Bullish.
      • Domestic (asset-specific): Industrial demand expectations, gold-silver ratio.
      • Cross: DXY weakness, risk appetite.
      • Levels: Support at 8100, resistance at 8200.
    • WTI / Brent:
      • Direction: Mixed.
      • Domestic (asset-specific): Iran tensions, EIA inventory data, OPEC output levels.
      • Cross: DXY, risk sentiment.
      • Levels: Watch inventory reports, supply disruptions.
    • Copper:
      • Direction: Bullish.
      • Domestic (asset-specific): Positive China growth outlook, LME stocks, supply issues.
      • Cross: DXY, global growth.
      • Levels: Support at 625, resistance at 635.
    • SPX:
      • Direction: Bullish.
      • Domestic (US): Earnings season, Fed policy outlook, US yield reaction.
      • Cross: VIX suppression, global sentiment.
      • Levels: Futures resistance at 7420, cash support 7330.
    • NDX:
      • Direction: Bullish.
      • Domestic (US): Mega-cap tech earnings, real yields and AI investments.
      • Cross: Rates sensitivity, low VIX environment.
      • Levels: Support at 28800, resistance at 29000.
    • US30 (Dow):
      • Direction: Bullish.
      • Domestic (US): Industrial earnings, cyclical sentiment.
      • Cross: Bond yields response.
      • Levels: Support at 49500, resistance at 50000.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk, and US macro performance.
      • Levels: Support at 22800, resistance at 22950.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): German Bund yields and broader Eurozone sentiment.
      • Cross: US Tech, DXY, risk appetite.
      • Levels: Support at 24400, resistance at 24550.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY strength sensitivity, JGB yields, BoJ policy.
      • Cross: US tech, global risk appetite.
      • Levels: Support at 62500, resistance at 62800.
    • BTC:
      • Direction: Neutral.
      • Domestic (asset-specific): ETF inflows, on-chain activity, funding rate.
      • Cross: DXY direction, risk sentiment, and Nasdaq correlation.
      • Levels: Support at $79,000, resistance at $80,500.

    Positioning watch: USD, AUD and BTC are crowded longs, S&P, Nasdaq, GBP, JPY and NZD are crowded shorts. A strong payrolls number will amplify the USD short squeeze while a weak number risks a violent short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A strong US jobs report would trigger a massive USD rally, crush risk assets, and inflict maximum pain on the crowded short positions in GBP, JPY and tech stocks.

  • Euro Bids Higher as ECB Easing Path Slows – Friday, 8 May

    Where we are: EUR/USD is currently trading at 1.1777, up 0.45% on the day and testing the upper end of its intraday range of 1.1723-1.1778. The Fiber has caught a bid throughout the European morning, extending gains from the Asian session and challenging levels last seen in late April. This current level marks a significant breach of recent resistance, potentially paving the way for further upside.

    What’s driving it: The Euro is catching a bid as expectations for aggressive ECB easing have been tempered. While the ECB cut rates in April, retaining a mild easing bias, sticky services inflation near 3% and wage data will keep the doves on a short leash. Recent communications from ECB officials, including Lagarde’s comments on stablecoins and Schnabel’s discussion of central bank independence, signal a cautious approach to further easing. The Euro is being additionally supported by broader risk-on sentiment, reflected in the rally in US equity futures, and a weaker DXY trading at 97.77.

    • ECB Deposit Facility Rate at 2.50% after a 25bp cut on April 17th.
    • DE 2Y yields are down 2bp d/d to 2.578%, suggesting a slight easing of monetary policy expectations but not enough to trigger a sell-off.
    • CFTC data shows net non-commercial Euro positioning modestly long at +35,712 contracts, leaving scope for further upside on short covering.

    NY session focus: All eyes are on the 08:30 ET US jobs report (Average Hourly Earnings, Non-Farm Employment Change, and Unemployment Rate). A weaker-than-expected print could fuel further Dollar weakness and propel EUR/USD towards 1.1800, while a strong report could trigger a reversal. The 10:00 ET Prelim UoM Consumer Sentiment and Inflation Expectations will also be closely watched for further clues on the Fed’s policy path. Watch for the ECB President Lagarde speaking at 09:00 CET as well. The trade that’s working is long EUR/USD. The trade that’s at risk is short EUR/GBP given the broader risk-on mood. The pain trade is a strong US jobs report sending EUR/USD back below 1.1700, squeezing Euro longs.

  • DAX Stuck in Range Despite Bund Yield Dip – Friday, 8 May

    Snapshot: The DAX is currently trading at 24456 (+0.05%), holding steady after a modest dip in German Bund yields. ECB commentary on financial integration is the main domestic driver, but lacks immediate directional impetus. ECB President Lagarde speaks at 09:00 CET.

    • Watch the 24500 level for a potential breakout to the upside; failure to break could signal renewed downside pressure.
    • Renewed military clashes mentioned in Trading Economics overview create risk into the New York session.

    Bias into NY: Neutral. We see the DAX tracking sideways into the NY open, as a slight dip in German yields is countered by US futures strength.

  • Euro/Yen Supported by Widening Eurozone-Japan Policy Divergence – Friday, 8 May

    Snapshot: EUR/JPY is trading at 184.38, up 0.26% on the session, driven primarily by the diverging policy outlooks of the ECB and BoJ. Lagarde’s scheduled speech at 09:00 CET will be closely monitored for any hints of further easing.

    • A break above intraday highs of 184.50 could signal further upside potential.
    • Watch for any headlines regarding intervention from the BoJ if Yen weakness persists.

    Bias into NY: We favour further upside in EUR/JPY, targeting 185.00, as the ECB maintains a mild easing bias while the BoJ signals a slow normalisation path. Broad dollar weakness, with the DXY at 97.77, adds to the momentum.

  • Euro/Pound Remains Bid Despite Bailey Speech – Friday, 8 May

    Snapshot: EUR/GBP trades at 0.8646, down 0.07% on the day, as markets remain focused on relative central bank easing cycles. The ECB’s mild easing bias contrasts with the Bank of England’s data-dependent stance, which has recently been reaffirmed by sticky inflation data. Later today, BOE Gov Bailey speaks at 13:20 London, adding headline risk to the pair.

    • A break above 0.8660 would target the late-April highs.
    • Watch for any shift in Bailey’s tone regarding the UK’s persistent services inflation.

    Bias into NY: EUR/GBP is likely to remain bid as Bund yields maintain a small advantage over Gilts; a weaker dollar, with the DXY at 97.77, also supports the Euro. Look for a potential push towards 0.8680 if Bailey provides no hawkish surprises.

  • NY Session Tactical Brief – Thursday, 7 May

    Regime: Mixed, with VIX holding steady at 17.38 and US yields slightly lower, suggesting a cautious risk-on sentiment tempered by geopolitical tensions.

    Today’s market themes:

    • Mideast Peace Potential: Easing oil supply concerns dominate, pressuring crude and boosting risk assets.
    • Dollar Weakness: DXY continues its descent, supporting EUR, GBP, AUD, and gold.
    • Earnings Rotation: Focus shifts to industrial and financial earnings in the US after tech-led rally.

    The setup: Markets are pricing in a higher probability of a Middle East peace deal, driving WTI down nearly 6% to $90.21. This is providing a tailwind for risk assets, especially equities. However, crowded positioning in USD and Aussie could trigger a squeeze on any hawkish surprises. Watch US Unemployment Claims at 08:30 ET.

    Watch list (native time per event):

    • 08:30 ET USD: Unemployment Claims (forecast 205K, prior 189K)
    • 10:00 ET USD: Factory Orders (prior 0.8%)
    • 14:00 BST GBP: BoE’s Breeden speaks on Inflation

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): Fed likely to remain cautious; watch claims data.
      • Cross: Risk-on sentiment weighing; EUR and GBP strength.
      • Levels: Resistance at 97.90, support at 97.65.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, positive risk sentiment, US-DE 10Y widening.
      • Levels: Support at 1.1740, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, boosted by positive risk sentiment.
      • Levels: Support at 1.3590, resistance at 1.3650.
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response.
      • Cross: US 10Y stable, risk-on environment, intervention risk high.
      • Levels: Support at 156.00, resistance at 156.50.
    • USD/CAD (Loonie):
      • Direction: Down
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: WTI weakness, DXY direction, US-CA 10Y spread.
      • Levels: Support at 1.3620, resistance at 1.3650.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, China growth optimism.
      • Levels: Support at 0.7230, resistance at 0.7270.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, positive risk sentiment.
      • Levels: Support at 0.5950, resistance at 0.5990.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness, safe-haven outflows into risk-on.
      • Levels: Support at 0.7770, resistance at 0.7800.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY up, GBP/JPY up
      • Domestic: Relative hawkishness of BoE priced in; BoJ dovish.
      • Cross: Risk-on favoring JPY crosses; DXY impact on EUR/GBP.
      • Levels: Monitor ranges, relative yield direction key.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Rising as breakevens rise; CB demand supportive.
      • Cross: DXY weakness, safe haven demand diminishing.
      • Levels: Support at 4700, resistance at 4765.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand supportive.
      • Cross: DXY weakness, positive risk sentiment.
      • Levels: Support at 8000, resistance at 8250.
    • WTI / Brent:
      • Direction: Down
      • Domestic (asset-specific): Peace deal/higher supply.
      • Cross: DXY strength would add to move lower; risk aversion would add to move lower.
      • Levels: Support at 90.00, resistance at 96.00.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China rebound expectations/LME-stock
      • Cross: Global growth proxy; Dollar strength a headwind
      • Levels: Support at 615, resistance at 625
    • SPX:
      • Direction: Up
      • Domestic (US): Earnings momentum; rates stabilize.
      • Cross: Positive global tone, VIX suppression.
      • Levels: Futures support at 7380, resistance at 7410, cash support 7300.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap tech earnings supportive/ AI narrative.
      • Cross: Lower rates sensitivity, high beta.
      • Levels: Resistance at 28800, support 28600.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Rebound in industrial earnings; cyclical shift.
      • Cross: Responding positively to bond-yield relief.
      • Levels: Resistance near 50200, support at 49900.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Global risk, benefiting from oil decline.
      • Levels: Support at 22800, resistance at 23000.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; weak economic data.
      • Cross: Watching US tech strength; risk-on sentiment.
      • Levels: Support at 24850, resistance at 25000.
    • Nikkei:
      • Direction: Up
      • Domestic (JP): JPY weakness driving earnings.
      • Cross: Catching up with US tech performance; risk-on buying.
      • Levels: Support at 62000, resistance at 63000.
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow-dependent, funding elevated.
      • Cross: risk-regime, positive overall, high correlation to tech.
      • Levels: Support at 80500, resistance at 81700.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (>90th percentile) and crowded shorts in JPY, GBP, and Nasdaq (

    The pain trade: A hawkish surprise from the US Unemployment Claims, triggering a USD rally and sending risk assets lower, would hurt the most positions.

  • Euro Surges on Weaker Dollar, ECB Policy in Focus – Thursday, 7 May

    Where we are: EUR/USD is currently trading at 1.1775, up 0.21% on the session, breaching the overnight high of 1.1778. The pair has been consolidating gains made earlier in European trading, with the overnight range contained between 1.1745 and the current level. This price action marks a continuation of the bullish momentum seen yesterday, and sits comfortably above the prior NY close.

    What’s driving it: The euro is catching a bid, primarily driven by a softer dollar, as US yields drift lower and risk sentiment remains positive. Domestically, the market continues to digest the ECB’s recent 25bp rate cut to 2.50% at their April 17th meeting, with a mild easing bias maintained. Dovish expectations are being fueled by softening wage trackers and services HICP near 3%, which are solidifying the doves’ base case for a follow-up cut. The German 2-year Schatz yield is down 3bp on the day at 2.519%, while the 10-year Bund is down 2bp to 2.959%, indicating a flattening bias in the German curve.

    • ECB’s de Guindos this morning highlighted the importance of deepening financial integration to support Europe’s prosperity.
    • Money markets are pricing in approximately 50bps of ECB rate cuts by year-end, with a 75% chance of the first move in June.
    • Speculative positioning remains modestly long EUR, with net non-commercial contracts at +35,712 (10th percentile), suggesting squeeze potential remains limited.

    NY session focus: The main event for the NY session will be the 08:30 ET release of US Unemployment Claims, with a forecast of 205K versus a previous 189K. A significant miss to the upside could further pressure the dollar and lift EUR/USD towards 1.1800, while a beat could see a retest of the 1.1745 level. The US 10-year yield currently trades at 4.316%, down nearly 3bp on the session, and further downside would likely fuel the EUR/USD rally. The pain trade would be a surprise hawkish signal out of Europe, or a strong US jobs number that puts the Fed back in focus.

  • DAX Flat as Bund Yields Drift Lower – Thursday, 7 May

    Snapshot: The DAX is holding steady at 24926, virtually unchanged on the day, as German Bund yields drift lower. ECB commentary this morning on deepening financial integration has offered little immediate impetus. All eyes turn to New York open.

    • Watch 25,000 level – breach could trigger further upside.
    • Beware risk-off move in US session offsetting positive Asia open.

    Bias into NY: Sideways. The German index is likely to consolidate in the absence of a strong domestic driver, with the flat DAX in cash mirroring equally tepid US futures; any risk sentiment emanating from Wall Street could provide direction.

  • EUR/JPY Eyes 184.00 as Dovish ECB Rhetoric Softens – Thursday, 7 May

    Snapshot: EUR/JPY trades at 183.99, up 0.21% on the session, buoyed by persistent dovish undertones from the ECB despite recent inflation data meeting expectations. No specific Eurozone macro prints expected before the NY close, placing focus on overnight BoJ minutes.

    • Watch for a break above intraday high of 184.16 to confirm bullish momentum.
    • Risk lies in a hawkish surprise from the BoJ, especially if the MoF signals discomfort with current Yen levels.

    Bias into NY: Bullish, with a target of 184.50 as the ECB’s mild easing bias and comments from De Guindos contrasting with the BoJ’s slow normalisation, overshadowing slight weakness in the DXY at 97.69.

  • Euro/Sterling rangebound as markets eye tomorrow’s BoE decision – Thursday, 7 May

    Snapshot: EUR/GBP trades near 0.8642, down 0.04% on the day, as markets digest recent ECB communications and position for tomorrow’s Bank of England meeting. The BoE’s cautiously data-dependent stance contrasts with the ECB’s mild easing bias. No major UK or Eurozone data releases are scheduled before the NY close today.

    • Watch for any leaks or whispers ahead of the BoE decision tomorrow. Support at 0.8637, the day’s low so far.
    • Risk lies in a hawkish surprise from the BoE, which could trigger a sharp Sterling rally given the single dissenting vote for a cut at the last meeting.

    Bias into NY: Sideways, with a mild downside bias below 0.8650. The ECB’s recent 25bp rate cut and continued dovish rhetoric, contrasted against the BoE’s current hold and split vote, keep pressure on Euro/Sterling to the downside.

  • NY Session Tactical Brief – Wednesday, 6 May

    Regime: Risk-on, fuelled by falling US yields and hopes of de-escalation in the Middle East; VIX is elevated but failing to hold gains.

    Today’s market themes:

    • Geopolitical relief rally: Equities and gold gain on reports of a potential US-Iran deal, sending oil sharply lower.
    • Dovish ECB spillovers: European yields are sharply lower after ECB commentary and stable wage data, supporting European equities.
    • Crowded short squeeze: Risk assets supported by potential short squeeze with CFTC data showing traders are heavily short JPY and Nasdaq.

    The setup: Oil’s sharp decline is the key driver today, prompting a rotation into risk assets, and supporting gold. The trade is to fade the rally in gold as real yields remain positive. Key risk is a breakdown in the US-Iran deal, which would send oil prices sharply higher again and reverse the risk-on tone.

    Watch list (native time per event):

    • 08:15 ET USD: ADP Non-Farm Employment Change (118K vs 62K)
    • 10:00 ET CAD: Ivey PMI (49.9 vs 49.7)
    • 16:15 ET CAD: BOC Gov Macklem Speaks

    Bias by asset:

    • DXY:
      • Direction: Down
      • Domestic (US): US data will be crucial in determining the next direction.
      • Cross: Risk sentiment and falling US yields are weighing.
      • Levels: Support at 97.50, resistance at 98.00.
    • EUR/USD:
      • Direction: Up
      • Domestic (EU): Lower Bund yields are supporting as ECB turns dovish.
      • Cross: Weaker DXY and positive risk sentiment are supportive.
      • Levels: Support at 1.1700, resistance at 1.1800.
    • GBP/USD (Cable):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness and risk appetite are key drivers.
      • Levels: Support at 1.3550, resistance at 1.3650.
    • USD/JPY:
      • Direction: Down
      • Domestic (JP): Intervention risk remains, limiting JPY weakness.
      • Cross: Falling US 10Y yields and a weaker DXY are pressuring.
      • Levels: Support at 155.00, resistance at 157.00.
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): BoC speakers watch to see if rate cuts are coming.
      • Cross: USD weakness offset by lower WTI, US-CA 10Y stable.
      • Levels: Support at 1.3580, resistance at 1.3650.
    • AUD/USD (Aussie):
      • Direction: Up
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Copper price rise and DXY weakness, China growth hopes aiding.
      • Levels: Support at 0.7200, resistance at 0.7280.
    • NZD/USD (Kiwi):
      • Direction: Up
      • Domestic (NZ): RBNZ speakers in focus, impact on kiwi to be assessed.
      • Cross: DXY weakness and risk-on, limited by US yield impact.
      • Levels: Support at 0.5900, resistance at 0.6000.
    • USD/CHF (Swissy):
      • Direction: Down
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY weakness and haven demand waning.
      • Levels: Support at 0.7770, resistance at 0.7830.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed
      • Domestic: Relative CB divergence is a driver today.
      • Cross: EUR/GBP ranges. JPY shorts are exposed.
      • Levels: Monitor key levels from overnight session.
    • XAU (Gold):
      • Direction: Up
      • Domestic (asset-specific): Hopes for de-escalation are driving.
      • Cross: Weaker DXY, fading risk-off, positive momentum.
      • Levels: Support at 4650, resistance at 4700.
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): No fresh domestic catalyst — sensitive to US response.
      • Cross: Follows Gold’s trend, industrial demand boost.
      • Levels: Support at 7600, resistance at 7800.
    • WTI / Brent:
      • Direction: Down
      • Domestic (asset-specific): Deal chatter is main driver.
      • Cross: Weaker DXY isn’t sufficient to lift with Iran headlines.
      • Levels: Support at 90, resistance at 100.
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): No fresh domestic catalyst — sensitive to US response.
      • Cross: Aided by optimism.
      • Levels: Support at 610, resistance at 620.
    • SPX:
      • Direction: Up
      • Domestic (US): Boosted sentiment supports outlook.
      • Cross: VIX regime shift, global risk-on fueling.
      • Levels: Futures 7300, cash support at 7250, resistance at 7350.
    • NDX:
      • Direction: Up
      • Domestic (US): Mega-cap resilience and lower rates helpful.
      • Cross: Rate sensitivity supporting.
      • Levels: Monitor intraday resistance and support levels.
    • US30 (Dow):
      • Direction: Up
      • Domestic (US): Broader market lift aids cyclicals.
      • Cross: Lower yields benefit outlook.
      • Levels: Monitor intraday resistance and support levels.
    • UK100 (FTSE):
      • Direction: Up
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: Riding the positive global wave, GBP drag offset.
      • Levels: Monitor intraday resistance and support levels.
    • DAX:
      • Direction: Up
      • Domestic (DE): Lower Bund yields, EU tone aiding DAX.
      • Cross: Taking cues from US tech.
      • Levels: Monitor intraday resistance and support levels.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness and earnings are important.
      • Cross: Risk tone and US tech performance play a key role.
      • Levels: Monitor intraday resistance and support levels.
    • BTC:
      • Direction: Up
      • Domestic (asset-specific): ETF flow stable, and funding rate stable.
      • Cross: Risk sentiment.
      • Levels: Support at 81000, resistance at 83000.

    Positioning watch: JPY is the most crowded short (0th percentile) and Aussie is most crowded long (96th percentile), per CFTC. A dovish surprise from the Fed or a hawkish BoJ shift could trigger a significant squeeze in JPY.

    The pain trade: A surprisingly strong ADP print would reignite inflation concerns and send yields higher, triggering a sharp reversal of today’s risk-on move and hurting gold longs.