Category: EU

  • NY Session Tactical Brief – Wednesday, 29 April

    Regime: Mixed, as lower European equity indices and higher Brent prices offset positive sentiment from Bitcoin and US tech futures; VIX at 18.02.

    Today’s market themes:

    • BoC policy decision and press conference: Expect hawkish guidance from Macklem as inflation remains stubbornly high.
    • Hormuz Strait disruption fears support Oil: Geopolitical risks weigh as Brent hits one-month highs near $109/bbl.
    • USD awaits Fed decision: Dollar consolidating gains ahead of anticipated steady rates.

    The setup: Oil supply fears are currently the dominant driver, pushing Brent to $109. Focus now shifts to how the Fed will address these commodity price pressures at its upcoming meeting, particularly given continued indications that USD is “crowded long”. Rate decision + Powell presser could spur volatility. Watch for a DXY breakout if Powell speaks hawkishly or a sharp reversal if the Fed pivots dovishly on the recent inflation data.

    Watch list (native time per event):

    • 11:30 AEST AUD CPI m/m (forecast 1.3%, prior 0.0%)
    • 09:45 ET CAD BOC Rate Statement (forecast 2.25%, prior 2.25%)
    • 14:00 ET USD Federal Funds Rate (forecast 3.75%, prior 3.75%)

    Bias by asset:

    • DXY:
      • Direction: Neutral, awaiting Fed guidance.
      • Domestic (US): Fed policy decision, US data releases, US yield curve.
      • Cross: Risk sentiment, FX cross flows ahead of tech earnings.
      • Levels: Support 98.40, resistance 98.80.
    • EUR/USD:
      • Direction: Bearish, pressured by DXY strength.
      • Domestic (EU): Sticky Spanish inflation / peripheral spreads.
      • Cross: DXY strength, US-DE 10Y spread favoring USD, risk aversion.
      • Levels: Support 1.1690, resistance 1.1730.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-UK 10Y spread, risk-off flows.
      • Levels: Support 1.3490, resistance 1.3530.
    • USD/JPY:
      • Direction: Bullish, eyeing 160.
      • Domestic (JP): BoJ dovishness, intervention risk, JGB yields.
      • Cross: Rising US 10Y yield, DXY strength, risk-on flows.
      • Levels: Support 159.50, resistance 160.00.
    • USD/CAD (Loonie):
      • Direction: Neutral.
      • Domestic (CA): Hawkish BoC needed to push higher.
      • Cross: DXY strength, US-CA 10Y spread.
      • Levels: Support 1.3670, resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish, after mixed CPI data.
      • Domestic (AU): Mixed CPI response, RBA watch.
      • Cross: DXY strength, US-AU 10Y spread, China growth concerns.
      • Levels: Support 0.7150, resistance 0.7200.
    • NZD/USD (Kiwi):
      • Direction: Bearish, pressed by the RBNZ’s easing bias.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, US-NZ 10Y spread, risk-off flows.
      • Levels: Support 0.5850, resistance 0.5900.
    • USD/CHF (Swissy):
      • Direction: Bullish, supported by the SNB’s easing bias.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength, safe-haven outflows from CHF.
      • Levels: Support 0.7880, resistance 0.7910.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Neutral.
      • Domestic: Relative BoE and ECB stance, relative yields.
      • Cross: DXY strength, risk sentiment.
      • Levels: Monitor key support and resistance.
    • XAU (Gold):
      • Direction: Bearish, pressured by real yields.
      • Domestic (asset-specific): Rising real yields pressuring gold.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 4550, resistance 4630.
    • XAG (Silver):
      • Direction: Bearish, impacted by industrial demand.
      • Domestic (asset-specific): Demand mixed and impacted by real yields.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 7180, resistance 7380.
    • WTI / Brent:
      • Direction: Bullish, supply disruption fears.
      • Domestic (asset-specific): Geopolitical factors driving surge.
      • Cross: Weaker DXY could add fuel to rally, risk on.
      • Levels: WTI support 100.00, Brent support 105.00.
    • Copper:
      • Direction: Neutral, but China key.
      • Domestic (asset-specific): Eyes on China growth, LME stock levels.
      • Cross: Global growth sentiment.
      • Levels: Support 595, resistance 603.
    • SPX:
      • Direction: Sideways, waiting on Fed and earnings.
      • Domestic (US): Eyes on earnings and Fed stance.
      • Cross: VIX regime, global macro.
      • Levels: Futures support 7160, resistance 7190.
    • NDX:
      • Direction: Neutral, focused on mega-cap earnings.
      • Domestic (US): Earnings and AI optimism.
      • Cross: Rates sensitive, watching VIX.
      • Levels: Support 27190, resistance 27320.
    • US30 (Dow):
      • Direction: Neutral, industrials in focus.
      • Domestic (US): Earnings focus and overall US data.
      • Cross: Bond yield reaction.
      • Levels: Support 49200, resistance 49420.
    • UK100 (FTSE):
      • Direction: Bearish, underperforming on Sterling strength.
      • Domestic (UK): Sterling and Gilt yields.
      • Cross: Global sentiment.
      • Levels: Support 22280, resistance 22450.
    • DAX:
      • Direction: Bearish, dragged by German yields.
      • Domestic (DE): German yields and data.
      • Cross: US tech and risk.
      • Levels: Support 23900, resistance 24100.
    • Nikkei:
      • Direction: Bearish, after BoJ inaction.
      • Domestic (JP): JPY levels and JGB yields.
      • Cross: US tech, risk.
      • Levels: Support 59700, resistance 60650.
    • BTC:
      • Direction: Bullish, trending higher.
      • Domestic (asset-specific): ETF flows supportive.
      • Cross: Risk-on environment.
      • Levels: Support 76000, resistance 78000.

    Positioning watch: USD and AUD are crowded longs, while JPY and NZD are crowded shorts. A dovish Fed surprise or positive Japanese data could trigger significant short squeezes in the JPY and NZD.

    The pain trade: A dovish hold from the Fed, coupled with commentary suggesting openness to rate cuts later this year, would trigger a sharp DXY sell-off and a rally in risk assets, catching crowded USD longs off guard.

  • Euro Under Pressure as Bund Yields Climb – Wednesday, 29 April

    Where we are: EUR/USD trades at 1.1697, down 0.15% on the day and near the bottom of its 1.1694-1.1721 intraday range. The Fiber continues to struggle below the 1.1700 handle, failing to capitalize on earlier European session attempts to rally. This comes after yesterday’s close near 1.1715, signaling a continuation of the recent bearish trend.

    What’s driving it: Euro weakness is being driven by a combination of factors, but the immediate pressure stems from rising German yields, particularly the Schatz (2Y) which is up 4bp to 2.690%. This yield move is happening in tandem with concerning regional CPI numbers, with Spanish inflation unexpectedly quickening beyond the ECB’s goal. Even with the most recent ECB cut of 25bp, markets are concerned further easing is less likely if inflation continues to accelerate. The mildly easing bias remains in place, but policymakers are clearly divided. DXY strength, currently at 98.61, is adding additional downside pressure on the Fiber.

    • The Spanish inflation print is at 3.5%, the highest since June 2024, creating doubt about ECB easing.
    • DE 2Y (Schatz) yields climbed to 2.690%, a 4bp increase on the day.
    • Speculator positioning in the Euro is modestly long at +41,324 contracts, sitting at the 10th percentile; this leaves significant room for further short positioning.

    NY session focus: Focus in the NY session shifts squarely to the FOMC decision at 14:00 ET and the subsequent press conference at 14:30 ET. Markets widely expect rates to remain unchanged at 3.75%, but any hawkish rhetoric could send the DXY higher and EUR/USD lower, potentially testing the 1.1650 level. Keep an eye on the US 2Y yield, currently at 3.879%, which is highly sensitive to Fed policy expectations. A break below 1.1690 could trigger a deeper sell-off towards 1.1600. The pain trade for EUR/USD would be a dovish surprise from the Fed, prompting a sharp rally back towards 1.1750.

  • DAX Faces Headwinds as German Yields Rise – Wednesday, 29 April

    Snapshot: The DAX is currently trading at 23987 (-81, -0.34%), pressured by a rise in German yields. The 2-year Schatz is up 4bp to 2.690%, while the 10-year Bund is up 2bp to 3.078%. Focus shifts to the upcoming German Prelim CPI m/m release at 08:29 CET.

    • Watch for a break below 23920, today’s low, to confirm further downside momentum.
    • Rising US yields and a firmer DXY pose a headwind to DAX performance during the NY session.

    Bias into NY: Slightly bearish on the DAX, anticipating continued pressure from rising German yields and a potentially stronger dollar; look for a test of 23900. The Nikkei’s overnight -1.01% performance to 59917 also weighs on sentiment.

  • Euro/Yen Bids Above 187 as BoJ Hike Expectations Persist – Wednesday, 29 April

    Snapshot: EUR/JPY is trading at 187.10, up 0.09% on the session, driven by continued hawkish sentiment surrounding the Bank of Japan. The BoJ’s March decision to hold rates while flagging further hikes remains the dominant driver, while the market looks to the BoJ’s meeting tomorrow. The German Prelim CPI m/m at 08:29 CET will offer near-term EUR direction.

    • A break above the intraday high of 187.16 would signal further upside.
    • Risk lies in any dovish repricing from the ECB, especially if German CPI comes in weak, although for now the mildly hawkish BoJ stance dominates.

    Bias into NY: Bullish on EUR/JPY while the BoJ hike narrative holds. A push above 187.20 could open the door to further gains, while the DXY’s bid above 98.60 and rising US yields provide a secondary tailwind.

  • EUR/GBP Rangebound as Markets Await Fresh Catalysts – Wednesday, 29 April

    Snapshot: EUR/GBP trades at 0.8663, down 0.03% on the day, as the market digests recent ECB and BoE communications. With no immediate domestic catalysts, the pair is likely to remain rangebound. Watch for the German Prelim CPI m/m print at 08:29 CET for potential intraday volatility.

    • Support appears to be holding near the 0.8661 intraday low, while resistance is seen around 0.8670.
    • BoE’s PRA publication concerning life insurance resilience might add a marginal headwind to Sterling sentiment.

    Bias into NY: Neutral. The absence of immediate domestic drivers suggests EUR/GBP will likely track broader risk sentiment, with a break above 0.8670 needed to challenge the upside amid a firmer DXY at 98.61 and rising US yields.

  • NY Session Tactical Brief – Tuesday, 28 April

    Regime: Risk-off, as Nasdaq futures lead declines and gold tests three-week lows, driven by persistent inflation fears and higher front-end yields (US 2Y +3.5bp).

    Today’s market themes:

    • OPEC+ uncertainty: UAE exit sparks oil supply concerns, boosting crude prices.
    • BOJ disappointment: Yen weakens as BOJ holds policy, defying hawkish expectations.
    • Australian Inflation: RBA to watch closely.

    The setup: Market participants are repricing for potentially persistent inflation with focus on the Fed and data dependency. Rising yields and a stronger USD are weighing on risk assets. Front-end US yields are climbing, driving DXY higher (98.58) and pressuring equities. Watch for follow-through in NY session, especially tech given the Nasdaq’s underperformance.

    Watch list (native time per event):

    • 10:00 ET USD: CB Consumer Confidence (forecast 89.0, prior 91.8)
    • 11:30 AEST AUD: CPI y/y (forecast 4.8%, prior 3.7%)
    • 12:30 NZT NZD: RBNZ Gov Breman Speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Fed likely to maintain hawkish stance given sticky inflation.
      • Cross: Risk-off sentiment and rising yields support demand.
      • Levels: Resistance at 98.75, support at 98.25.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and widening US-DE 10Y spread pressure pair.
      • Levels: Resistance at 1.1725, support at 1.1675.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and widening US-UK 10Y spread weighs on Cable.
      • Levels: Resistance at 1.3540, support at 1.3460.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ holds steady, reinforcing dovish stance. Intervention risk remains.
      • Cross: US 10Y yield rise widens US-JP yield differential.
      • Levels: Resistance at 159.80, support at 158.95.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and US-CA 10Y spread support pair.
      • Levels: Resistance at 1.3680, support at 1.3610.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): CPI data likely to inform RBA stance on rates.
      • Cross: DXY strength, China growth concerns weigh.
      • Levels: Resistance at 0.7195, support at 0.7150.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ Gov Breman speaks; further easing priced in.
      • Cross: DXY strength and risk-off sentiment pressure Kiwi.
      • Levels: Resistance at 0.5920, support at 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and safe-haven unwinding support pair.
      • Levels: Resistance at 0.7910, support at 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY bearish, GBP/JPY bearish.
      • Domestic: BoJ dovishness supports GBP/JPY.
      • Cross: DXY strength impacts all crosses; risk-off benefits JPY.
      • Levels: Watch key support/resistance levels.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields weigh on gold.
      • Cross: DXY strength further pressures gold.
      • Levels: Resistance at 4600, support at 4565.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Industrial demand concerns add to pressure.
      • Cross: DXY strength and risk-off sentiment drag silver lower.
      • Levels: Resistance at 7250, support at 7200.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): UAE withdrawal from OPEC creates supply uncertainty.
      • Cross: Risk-off sentiment could limit upside despite supply concerns.
      • Levels: WTI resistance at $102, Brent resistance at $106.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh on demand.
      • Cross: DXY strength adds to downward pressure.
      • Levels: Resistance at 600, support at 593.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Rising yields and mixed earnings reports weigh.
      • Cross: VIX trending higher; risk-off mood dominates.
      • Levels: Futures resistance at 7225, cash support at 7145.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Higher real yields and mixed earnings data weighs heavy.
      • Cross: Sensitive to increased rates and hawkish Fed stance.
      • Levels: Resistance at 27500, support at 27000.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): No clear catalyst — sensitive to overall market tone.
      • Cross: Resilient reaction to bond-yield movement in last session.
      • Levels: Resistance at 49500, support at 49300.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness and global factors dominate.
      • Cross: Reacting sharply to global risk-off.
      • Levels: Resistance at 22500, support at 22400.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Cautious outlook from ECB surveys.
      • Cross: Risk-off and tech weakness weigh on DAX.
      • Levels: Resistance at 24150, support at 23900.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): BoJ inaction pressures Nikkei.
      • Cross: Risk regime compounds effects on the downside.
      • Levels: Resistance at 60600, support at 59700.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Negative sentiment, ETF outflows.
      • Cross: Correlations with Nasdaq and risk assets weighing.
      • Levels: Resistance at 77500, support at 76000.

    Positioning watch: The crowded JPY short (0th percentile) is vulnerable to a squeeze on any surprise shift in BoJ policy or hawkish rhetoric. AUD and Bitcoin long positions (>85th percentile) are also at risk of a correction given the current risk-off environment.

    The pain trade: A dovish surprise from the Fed, reversing the yield spike and triggering a short squeeze in JPY, would inflict maximum pain on crowded short positions and boost risk assets.

  • Euro Under Pressure as Rate Cut Bets Persist – Tuesday, 28 April

    Where we are: EUR/USD trades at 1.1692, down 0.26% on the day, after a volatile overnight session between 1.1678 and 1.1727. The Fiber is struggling to hold above intraday lows and is testing the lower end of its recent range. A break below 1.1678 would expose the 1.1650 level, while resistance remains up at 1.1727.

    What’s driving it: The mildly dovish tilt from the ECB continues to weigh on the Euro. Despite holding steady this month, last week’s 25bp cut to 2.50% and the commitment to a meeting-by-meeting approach leave the door open for further easing in June. Disappointing Eurozone economic data continues to build the dovish case, with the ECB’s own survey pointing to tighter lending conditions. Downside pressure has been exacerbated by a stronger dollar, with the DXY currently at 98.58, and rising US yields.

    • The ECB Consumer Expectations Survey for March and April’s bank lending survey both highlighted tightening financial conditions in the Eurozone.
    • German 2-year Schatz yields are up 4bp to 2.629%, a relatively muted response that is failing to provide meaningful support to the Euro.
    • Speculative positioning remains modestly long at +41,324 contracts, but the rise of +15,306 contracts w/w indicates increased vulnerability to a downside surprise, especially if US data prints hot.

    NY session focus: All eyes are on the 10:00 ET release of US CB Consumer Confidence. A stronger-than-expected print could fuel further dollar strength and pressure EUR/USD towards 1.1650. Conversely, a weaker print could offer a temporary reprieve, potentially pushing the pair back towards 1.1727. The US-DE 10Y yield spread, currently at +129bp, continues to act as a major headwind for the Fiber. The trade that’s working is short EUR/USD on bounces. The pain trade is a weak US confidence number alongside dovish ECB comments triggering a short squeeze.

  • DAX Under Pressure as Rate Cut Hopes Fade – Tuesday, 28 April

    Snapshot: The DAX is currently trading at 24020, down 48 points or 0.20% intraday, weighed down by tighter lending conditions and recent ECB surveys suggesting a cautious outlook. The lack of progress in US-Iran negotiations and rising oil prices are adding to the downward pressure. No major data releases are scheduled before the NY open.

    • A break below the intraday low of 23898 could open the door to further downside.
    • Watch for any unexpected headlines regarding the Iran war or developments in US-Iran negotiations, which could trigger a risk-off move.

    Bias into NY: Cautiously bearish. The domestic picture of tightening lending conditions and a relatively flat German yield curve (2s10s at +44bp) suggests limited upside, while the firmer DXY (98.58) adds to headwinds.

  • Euro/Yen Drifts Lower Ahead of BoJ Decision – Tuesday, 28 April

    Snapshot: EUR/JPY trades at 186.56, down 0.17% on the session, pressured by expectations surrounding today’s Bank of Japan policy decision. The BoJ is expected to hold rates steady, but any hawkish tilt in the Outlook Report or Monetary Policy Statement at 12:04 JST could trigger a further downside move. Focus shifts to the BoJ Press Conference at 15:30 JST.

    • Key support lies at 186.11, the day’s low; break below opens up a test of 185.50.
    • Upside risk comes from a dovish surprise from the BoJ, or a re-acceleration in Eurozone services HICP.

    Bias into NY: Cautiously bearish, anticipating potential JPY strength following the BoJ meeting. Look for a test of 186.00, but keep an eye on DXY strength which could mitigate the downside.

  • EUR/GBP Remains Bid on BoE Dovish Repricing – Tuesday, 28 April

    Snapshot: EUR/GBP currently trades at 0.8670, up 0.10% on the day. The dominant driver remains the divergence in central bank outlooks, with the BoE perceived as increasingly likely to cut rates sooner than the ECB. Today’s ECB surveys provide little impetus for a change in outlook.

    • Watch for resistance around 0.8678, the day’s high, a break of which would open up a test of recent ranges.
    • Risk: A surprise hawkish signal from the BoE in the coming weeks, potentially pushing back against rate cut expectations.

    Bias into NY: We favour further upside in EUR/GBP towards 0.8700 as the market continues to price in a more dovish BoE relative to the ECB. DXY strength and higher US yields could temper the move but are secondary to the central bank divergence.

  • NY Session Tactical Brief – Monday, 27 April

    Today’s market themes:

    • Iran tensions easing: potential peace proposal buoying risk assets, weighing on oil.
    • BOJ hold: yen weakness continues post-policy announcement.
    • Crowded positioning: squeeze risk in USD, JPY, AUD, BTC, and Copper.

    The setup: The market is pricing in reduced geopolitical risk following reports of a potential peace proposal from Iran, triggering a risk-on move. Expect continued USD weakness and commodity pullback near-term. Watch for a breakout above 216.00 in GBP/JPY to confirm bullish momentum. US 10Y at 4.323%.

    Watch list (London time):

    • 13:30 [Medium] USD: CB Consumer Confidence (forecast 97.0, prior 98.7)
    • 15:00 [Low] US: Richmond Manufacturing Index (forecast -5, prior -11)
    • Any BOJ speaker comments regarding future policy adjustments.

    Bias by asset:

    • DXY: Down, risk-on sentiment and unwinding of crowded longs, target 97.80.
    • EUR: Up, weaker dollar and wider US-DE 10Y spread (+130bp), target 1.1800.
    • GBP: Up, risk-on and slightly narrower US-UK 10Y (-63bp), targeting 1.3600.
    • JPY: Down, BOJ inaction fuels yen weakness; US-JP 10Y at +185bp.
    • CAD: Up, weaker dollar, supported by WTI strength.
    • AUD: Up, driven by energy prices and weaker USD.
    • NZD: Up, benefiting from risk-on sentiment, supported by reports of easing tensions.
    • CHF: Down, weaker dollar as DXY falls and risk appetite returns.
    • EUR/GBP, EUR/JPY, GBP/JPY: Neutral, watching cross currents of risk and individual currency drivers.
    • XAU (Gold): Neutral, real yields stable but safe haven demand ebbing.
    • XAG (Silver): Neutral, trading lower with gold; keep an eye on the gold/silver ratio.
    • WTI / Brent: Mixed, Iran headlines offset bullish drivers; watch for $98 WTI break.
    • Copper: Down, concerns over China’s growth trajectory.
    • SPX: Up, supported by risk-on sentiment, targeting 7220.
    • NDX: Up, benefiting from lower rates and mega-cap momentum.
    • US30: Neutral, mixed picture; impacted by rising oil costs and potential peace.
    • UK100: Neutral, struggling due to strength in GBP and commodity sector drag.
    • DAX: Up, driven by easing tensions regarding Iran.
    • Nikkei: Up, technology sector strength and yen weakness persist.
    • BTC: Down, risk-off sentiment in crypto; crowded longs suggest downside risk.

    Positioning watch: CFTC data reveals crowded longs in USD, AUD, Copper, and Bitcoin, increasing squeeze risk on any negative news. JPY and NZD are crowded shorts, vulnerable to positive surprises.

    The pain trade: A surprise hawkish signal from a Fed speaker would crush risk assets, triggering a scramble to cover USD shorts and unwind equity longs.

  • Euro Attempts Recovery on DXY Weakness – Monday, 27 April

    Where we are: EUR/USD is currently trading at 1.1745, up 0.31% on the session, after printing a day range of 1.1705-1.1755. The pair has recouped some of last week’s losses, finding support near the 1.17 level. This bounce coincides with a broader weakening of the US Dollar, as the DXY trades down -0.29% to 98.14.

    What’s driving it: The primary driver is the broad USD weakness, reflected in the DXY decline. This appears linked to receding concerns about imminent aggressive Fed tightening, evidenced by the stability in US real yields. Simultaneously, the ECB’s survey pointing to a lack of second-round inflation effects has capped Euro upside, with the market factoring in a wait-and-see approach from the ECB on Thursday. The US-German 10-year yield spread sits at +130bp.

    • Reuters wire noting the ECB survey showed scant signs of second round inflation effects.
    • The FT reporting China warning the EU over the ‘Made in Europe’ law.
    • EUR net non-commercial positioning remains modestly long but at the 10th percentile, leaving room for further build.

    NY session focus: Expect volatility around the US data releases this morning, but the focus will quickly shift towards end-of-day flows. Watch for a break above 1.1755 to target 1.1800. Below, a retest of 1.1700 is likely. The EUR/USD trade continues to be dominated by swings in the DXY, making DXY levels critical indicators. The pain trade for EUR would be a resurgence in USD strength fueled by hawkish Fed commentary or geopolitical escalation.

  • DAX Lifted by Iran Peace Talk Hopes – Monday, 27 April

    Snapshot: The DAX is up 0.28% at 24262, buoyed by reports of a potential peace proposal from Iran. This optimism is overshadowing concerns about tighter lending conditions highlighted by the ECB’s survey.

    • Resistance seen at intraday high of 24380; break above would invite further upside.
    • Watch for any headlines undermining the Iran peace talk narrative; pullback could be swift.

    Bias into NY: Mildly bullish above 24150. A risk-on mood is prevailing in early trading, but keep in mind that German consumer confidence unexpectedly fell to a three-year low in May.

  • Euro/Yen Remains Bid as BOJ Policy Intact – Monday, 27 April

    Snapshot: EUR/JPY trades at 187.00, up 0.09% on the session, driven by persistent risk appetite despite a slightly weaker dollar. The BOJ’s overnight decision to hold steady on rates is a key driver, failing to provide any hawkish catalyst for the Yen.

    • Resistance sits near the intraday high of 187.07.
    • Watch US yields; a sharper rise could trigger a risk-off move, impacting EUR/JPY.

    Bias into NY: Bullish. The lack of hawkish signals from the BOJ, combined with positive risk sentiment shown by S&P futures trading +0.10%, suggests further upside potential toward 187.50.

  • Euro/Sterling Sideways as Lending Conditions Tighten – Monday, 27 April

    Snapshot: EUR/GBP sits at 0.8669, up 0.04% with a tight daily range. Euro strength is limited by the ECB’s reported tightening of lending conditions, offsetting DXY weakness and a mild risk-on tone in equities. US data will be the key catalyst today.

    • Watch for a break of the 0.8671 intraday high.
    • The ECB’s latest tightening of lending conditions is capping Euro gains; further negative news regarding EU banks could push the cross lower.

    Bias into NY: Neutral. With US data pending, expect range-bound trading between 0.8650 and 0.8680. A surprise from the data could force a break in either direction.