Category: Euro

  • Euro Under Pressure as ECB Rate Cut Bets Mount – Friday, 29 May

    Where we are: EUR/USD trades at 1.1646, down 0.05% on the day, caught between 1.1625 and 1.1656. Fiber remains below the prior NY close, with momentum favoring a retest of the lower end of the range. The pair is struggling to hold ground against a broadly firming dollar as markets handicap the divergence between ECB and Fed policy.

    What’s driving it: The mildly dovish ECB bias is weighing on the Euro, particularly with wage tracker data softening and services HICP hovering near 3%. While a fresh energy spike or a re-acceleration in services inflation could deter a follow-up rate cut at the June 5th meeting, the market is leaning towards further easing. This comes as data from France and Spain showed higher-than-expected inflation, potentially bolstering the case for ECB hawks. Rising US yields alongside a stronger DXY are adding to the downside pressure on the single currency.

    • The German 2-year Schatz yield has edged down 2bp to 2.550% showing that investors are pricing in more easing.
    • ECB research highlighting the potential for an Iran war impact to “doubly scar” Eurozone consumers underscores the fragility of the economic outlook.
    • Speculator positioning in the Euro is modestly long, with net non-commercial positions at +33,513 contracts, around the 12th percentile, but this positioning is well off recent highs and not indicative of any near-term squeeze.

    NY session focus: Focus now turns to any further reaction to the higher Eurozone inflation numbers reported overnight. Keep an eye on any surprises from US data, though the main event is behind us. The US-DE 10Y yield spread at +149bp continues to favor USD strength and offers a good indication as to where the pair will go if the risk bid takes a breather. Watch for a break below 1.1625, which could trigger a run towards 1.1600. The pain trade is a surprisingly hawkish signal from an ECB speaker, igniting a short squeeze to 1.1700.

  • NY Session Tactical Brief – Thursday, 28 May

    Regime: Risk-off, driven by rising Mideast tensions and a flight to safety, reflected in falling US yields and a VIX above 17.

    Today’s market themes:

    • Oil supply scare: Geopolitical risks in the Black Sea and Middle East fuel concerns over energy supply, boosting crude prices.
    • Core PCE watch: Markets brace for key US inflation data, which could dictate the Fed’s near-term policy path.
    • Crowded shorts at risk: GBP, JPY and Nasdaq are crowded short based on the CFTC positioning.

    The setup: Rising geopolitical risks are pushing investors into safe-haven assets, weakening equities and boosting oil. Focus is on the 08:30 ET Core PCE print. A surprise to the upside could trigger a risk-off move, whereas a downside surprise could trigger a rally. US 10Y is at 4.479%.

    Watch list (native time per event):

    • 14:00 NZT NZD: Annual Budget Release (Medium)
    • 08:30 ET USD: Core PCE Price Index m/m (High) forecast 0.3%, prior 0.3%
    • 08:30 ET USD: Prelim GDP q/q (High) forecast 2.0%, prior 0.7%

    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: Neutral to slightly lower.
      • Domestic (US): Fed policy dependent on PCE; US yields are key.
      • Cross: Risk-off flows provide some support; but geopolitical tension is negative.
      • Levels: Support at 99.11, resistance at 99.50.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): Lagarde’s commentary; Bund yields stable; watching sovereign spreads.
      • Cross: DXY weakness offsetting risk-off; US-DE 10Y spread supportive.
      • Levels: Resistance at 1.1640, support near 1.1585.
    • GBP/USD (Cable):
      • Direction: Neutral to bearish.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength limiting upside; risk-off sentiment hurts Cable.
      • Levels: Resistance at 1.3430, support at 1.3370.
    • USD/JPY:
      • Direction: Neutral to bullish.
      • Domestic (JP): Intervention risk remains high; JGB yields capped by BoJ.
      • Cross: US 10Y still above 4.45%; DXY support; risk-off may trigger unwinds.
      • Levels: Support at 159.30, resistance near 159.65.
    • USD/CAD (Loonie):
      • Direction: Neutral to bullish.
      • Domestic (CA): WTI price support; BoC likely on hold in June.
      • Cross: DXY strength; US-CA 10Y spread holds.
      • Levels: Support around 1.3835, resistance near 1.3870.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA likely to pause; iron ore volatility.
      • Cross: DXY strength; China growth concerns.
      • Levels: Resistance at 0.7145, support around 0.7100.
    • NZD/USD (Kiwi):
      • Direction: Neutral.
      • Domestic (NZ): Annual budget release; RBNZ expectations muted.
      • Cross: DXY strength limiting upside; risk-off sentiment weighs.
      • Levels: Resistance near 0.5910, support around 0.5865.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias; Swiss yields suppressed.
      • Cross: Safe-haven demand into USD; DXY strength.
      • Levels: Support at 0.7865, resistance near 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish.
      • Domestic: ECB vs BoE, BoJ; relative yields.
      • Cross: DXY impact on each leg; risk-off impacting JPY crosses.
      • Levels: Monitor range breaks from current levels.
    • XAU (Gold):
      • Direction: Bullish.
      • Domestic (asset-specific): Falling real yields supporting; breakevens stable.
      • Cross: Risk-off flows; DXY.
      • Levels: Support near 4400, resistance at 4490.
    • XAG (Silver):
      • Direction: Neutral.
      • Domestic (asset-specific): Industrial demand, Gold-Silver ratio monitoring.
      • Cross: DXY and risk appetite dictate direction.
      • Levels: Support near 7200, resistance at 7500.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply concerns, OPEC policy, EIA data.
      • Cross: Risk-off bid; DXY.
      • Levels: Monitor for breakouts above $93.00 and $96.00 respectively.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): China demand, LME stock levels, supply side constraints.
      • Cross: Global growth concerns.
      • Levels: Support near $624.00, resistance near $636.00.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Fed policy / US yield reaction; earnings season ongoing.
      • Cross: VIX spikes on geopolitical concern; risk-off tone prevails.
      • Levels: S&P fut: resistance at 7557, support at 7505.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings; real yield sensitivity on long-duration assets.
      • Cross: Rates sensitivity and elevated VIX.
      • Levels: Resistance at 30135, support near 29765.
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical tone; yield movements influencing industrial/financial sectors.
      • Cross: Bond yield reaction.
      • Levels: Resistance at 50819, support at 50576.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Sterling weakness; Gilt yield reactions.
      • Cross: Global risk; US market sentiment dampening performance.
      • Levels: Resistance near 23390, support around 23190.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): Bund yields; ECB rhetoric; IFO / ZEW.
      • Cross: US tech weakness impacting; DXY.
      • Levels: Resistance at 25175, support at 24995.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY moves, JGB yields, BoJ comments influencing sentiment.
      • Cross: US tech pressure impacting; overall risk tone.
      • Levels: Resistance near 65165, support around 63880.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates, ETF flows, and on-chain data under pressure.
      • Cross: DXY is supportive but broader risk-off pulls it down.
      • Levels: Resistance near 74500, support around 72500.

    Positioning watch: CFTC data shows crowded shorts in GBP, JPY and Nasdaq and crowded longs in AUD, Copper and Bitcoin. Any positive surprise from economic data (especially the US PCE) or easing of geopolitical tensions could trigger a short squeeze in GBP, JPY and Nasdaq.

    The pain trade: A weaker-than-expected Core PCE print would trigger a relief rally in risk assets, squeezing shorts in GBP, JPY and Nasdaq, and pressuring the DXY and pushing real-rates lower.

  • Euro Bounces from Lows, Awaits US Data – Thursday, 28 May

    Where we are: EUR/USD is currently trading at 1.1635, up 0.06% on the day after bottoming at 1.1586. The pair is trading within a relatively tight intraday range of 1.1586-1.1638, struggling to gain meaningful traction after an early dip. It remains to be seen if it can close above yesterday’s New York close.

    What’s driving it: The mild easing bias preserved by the ECB, even after last month’s 25bp cut, continues to weigh on the single currency. The market is weighing the probabilities of a follow-up cut in June, balancing softening wage trackers and services HICP against the risk of re-accelerating services inflation or fresh energy spikes. The modest bounce is likely driven by profit-taking after the dip and a slightly softer DXY; however, the US-DE 10Y spread at +149bp is not helping.

    • The ECB minutes from the April meeting were released this morning at 11:30 CET, but are unlikely to contain any surprises following the press conference.
    • German 2-year Schatz yields are down 2bp to 2.597%, while the 10-year Bund is also down 2bp to 2.990%, flattening the curve slightly.
    • Speculative positioning in EUR remains modestly long, but is at only the 12th percentile, suggesting limited scope for a major squeeze. However, that also points to limited conviction.

    NY session focus: The main event risk today is the US data dump at 08:30 ET, including Core PCE, Prelim GDP, GDP Price Index, and Unemployment Claims. Expect volatility around the releases. A hotter-than-expected Core PCE would likely pressure EUR/USD back towards the day’s lows and potentially break 1.1580. Conversely, a weaker GDP print would likely fuel a rally toward the 1.1650-1.1700 area, challenging the upper end of the recent range. Watch for Lagarde’s speech at 09:10 CET for any subtle shifts in tone, although policy communication is usually reserved for post-meeting press conferences. The pain trade would be a string of weaker US data pushing EUR/USD decisively above 1.1700, squeezing any remaining shorts.

  • NY Session Tactical Brief – Wednesday, 27 May

    Regime: Mixed. VIX sits at 16.59, while US 2Y yields are edging higher and the DXY hovers around 98.95, signaling risk-off sentiment battling positive momentum.

    Today’s market themes:

    • Strait of Hormuz tension eases: Oil prices plummet on reports of progress restoring shipping through the Strait, impacting commodity currencies.
    • Australian CPI miss: Cooler-than-expected Australian inflation data pressure the AUD, raising RBA policy questions.
    • RBNZ telegraphs tightening: The Reserve Bank of New Zealand holds steady but signals future rate hikes, boosting the Kiwi.

    The setup: Oil’s sharp drop after Iran’s signal about Strait of Hormuz shipping is cascading through markets. Watch CAD and commodity FX for further weakness if oil sustains its losses. A break below $87.80 in WTI could trigger a further sell-off.

    Watch list (native time per event):

    • 11:30 AEST AUD: CPI y/y (forecast 4.4%, prior 4.6%)
    • 14:00 NZT NZD: Official Cash Rate (forecast 2.25%, prior 2.25%)
    • 09:00 JST JPY: BOJ Gov Ueda Speaks

    Bias by asset:

    • DXY:
      • Direction: Sideways.
      • Domestic (US): Fed signaling mixed / inflation expectations remain sticky.
      • Cross: Oil impact / safe-haven demand ebb and flow.
      • Levels: Support 98.80 / Resistance 99.20.
    • EUR/USD:
      • Direction: Neutral.
      • Domestic (EU): ECB hawks vs doves battle / Bund yields rangebound.
      • Cross: DXY weakness offset by risk-off flow / US-DE 10Y widening.
      • Levels: Support 1.1630 / Resistance 1.1680.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE cut expectations building / Gilt yields under pressure.
      • Cross: DXY strength cap / US-UK 10Y divergence.
      • Levels: Support 1.3400 / Resistance 1.3480.
    • USD/JPY:
      • Direction: Bullish, but watch intervention.
      • Domestic (JP): BoJ cautious / Ueda verbal intervention / JGB constrained.
      • Cross: US 10Y supportive / risk-on flow offset by intervention threat.
      • Levels: Support 159.00 / Resistance 159.50.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC dovish / CAD vulnerable to oil rout.
      • Cross: DXY strength / US-CA 10Y supportive.
      • Levels: Support 1.3800 / Resistance 1.3850.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Weak CPI raises RBA pause risk.
      • Cross: DXY strength / US-AU 10Y negative spread / China uncertainty.
      • Levels: Support 0.7100 / Resistance 0.7180.
    • NZD/USD (Kiwi):
      • Direction: Bullish.
      • Domestic (NZ): RBNZ hawkish signal / OCR supports.
      • Cross: DXY strength offset by domestic policy tailwind.
      • Levels: Support 0.5850 / Resistance 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength / safe-haven fading.
      • Levels: Support 0.7820 / Resistance 0.7880.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed.
      • Domestic: Relative BoE/ECB/BoJ stance driving flows.
      • Cross: DXY chop / risk sentiment mixed.
      • Levels: Monitor individual charts for key levels.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields hurt gold / CB demand slows.
      • Cross: DXY strength / reduced safe-haven bid.
      • Levels: Support 4450 / Resistance 4500.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Industrial demand concerns / Gold underperformance.
      • Cross: DXY strength / risk aversion fading.
      • Levels: Support 7350 / Resistance 7500.
    • WTI / Brent:
      • Direction: Bearish.
      • Domestic (asset-specific): Strait of Hormuz progress weighs / EIA build risk.
      • Cross: DXY strength headwind / global growth worries.
      • Levels: WTI Support $87.50 / Resistance $90.00.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns / LME inventories rise.
      • Cross: DXY impact / global growth proxy weakens.
      • Levels: Support 630 / Resistance 640.
    • SPX:
      • Direction: Sideways.
      • Domestic (US): Earnings season tapering / Fed watch / yield sensitivity.
      • Cross: VIX stable / global growth concerns offsetting.
      • Levels: Futures support 7530 / resistance 7570.
    • NDX:
      • Direction: Sideways.
      • Domestic (US): Mega-cap results mixed / real yield pressure building.
      • Cross: Higher rates sensitivity / VIX benign.
      • Levels: Support 30000 / Resistance 30400.
    • US30 (Dow):
      • Direction: Sideways.
      • Domestic (US): Cyclical earnings mixed / bond yields a factor.
      • Cross: Sentiment dependent on yields / relative valuation.
      • Levels: Support 50500 / Resistance 50800.
    • UK100 (FTSE):
      • Direction: Bullish.
      • Domestic (UK): Sterling weakness helps / commodity strength supports.
      • Cross: Global risk on / US data impact.
      • Levels: Support 23300 / Resistance 23550.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech influence / DXY impact / risk tone.
      • Levels: Support 25200 / Resistance 25400.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY intervention risk / profit-taking after rally.
      • Cross: US tech / risk off.
      • Levels: Support 64500 / Resistance 65500.
    • BTC:
      • Direction: Sideways.
      • Domestic (asset-specific): ETF flows slowing / funding rates elevated.
      • Cross: DXY impact / risk correlated.
      • Levels: Support $75000 / Resistance $76000.

    Positioning watch: CFTC data shows crowded short positions in GBP and JPY, suggesting squeeze risk if data surprises positively. AUD and Copper are crowded longs, vulnerable to disappointment.

    The pain trade: A strong US data print today, particularly on inflation, would force a repricing of Fed expectations, hammering bonds and risk assets as the DXY surges.

  • Euro Grinds Higher as US Yields Compress – Wednesday, 27 May

    Where we are: EUR/USD is currently trading at 1.1655, up 0.21% on the day, having traded in a tight 1.1631-1.1661 range. The Fiber continues to consolidate gains made in early European trade, sitting comfortably above its prior NY close. Resistance looms at the 1.1670 level, while support is seen near 1.1630.

    What’s driving it: The Euro is benefiting from a slight dovish repricing in US yields, as the US-DE 10Y spread compresses to +150bp. Domestically, the focus remains on the ECB’s mild easing bias, reinforced by last month’s 25bp rate cut to 2.50%. While the ECB’s Financial Stability Review released at 10:00 CET is unlikely to trigger immediate market reaction, traders are eyeing the June 5th meeting, where a follow-up cut is still on the table contingent on wage tracker softening and services HICP remaining near 3%.

    • The Eurozone HICP printed at 2%, a 0.10% drop from the prior reading, while core HICP also fell 0.10% to 2.3%, supporting the dovish narrative.
    • The BTP-Bund spread has tightened by 1bp to 72bp, signaling some easing of sovereign stress.
    • CFTC data shows net non-commercial EUR positioning at +33,513 contracts, down -6,687 w/w and in the 12th percentile, which suggests limited risk of a long squeeze at current levels.

    NY session focus: The key focus for the NY session will be on the overall risk sentiment and any further moves in US yields, particularly at the long end, with the US 10Y currently at 4.468%. Keep an eye on the S&P 500 futures, which are up 0.30% at 7558.00. Key levels for EUR/USD are 1.1630 support and 1.1670 resistance. The trade that’s working is fading dips towards 1.1630. The trade at risk is chasing the rally above 1.1670 without a convincing break. The pain trade for the Fiber is a hawkish surprise from a Fed speaker sparking a US yield surge.

  • NY Session Tactical Brief – Tuesday, 26 May

    Regime: Risk-off as higher real yields trigger broad USD strength, with VIX hovering at 16.76 and US 10Y at 4.486%.

    Today’s market themes:

    • Real-rate repricing: Rising US real yields exert downward pressure on risk assets and commodity prices, favoring USD strength.
    • AUD CPI impact: Australian inflation data sets the tone for RBA policy expectations, with potential for a squeeze on crowded AUD longs.
    • RBNZ decision: RBNZ decision and monetary policy statement in focus.

    The setup: US real yields continue their ascent, tightening financial conditions and prompting a broad risk-off move. The crowded AUD long is vulnerable to downside surprise from CPI, and traders will be watching the RBNZ closely. Look for opportunities to fade rallies in risk assets. Support for S&P futures at 7525.

    Watch list (native time per event):

    • 10:00 ET USD: CB Consumer Confidence (forecast 91.9, prior 92.8)
    • 11:30 AEST AUD: CPI y/y (forecast 4.4%, prior 4.6%)
    • 14:00 NZT NZD: RBNZ Official Cash Rate (forecast 2.25%, prior 2.25%)

    Bias by asset:

    • DXY:
      • Direction: Bullish.
      • Domestic (US): Fed hawkish tone / resilient US data / rising US yields
      • Cross: Global risk aversion / EUR weakness / safe-haven demand
      • Levels: Resistance 99.11, support 98.95
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): ECB dovishness / weak HICP / widening sovereign spreads
      • Cross: Strong DXY / widening US-DE 10Y spread / risk-off flows
      • Levels: Resistance 1.1645, support 1.1624
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): BoE caution / soft services CPI / underperforming Gilts
      • Cross: Strong DXY / widening US-UK 10Y spread / risk aversion
      • Levels: Resistance 1.3505, support 1.3465
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ ultra-dovish / no wage growth / intervention rhetoric
      • Cross: Rising US 10Y / DXY strength / risk-on supports carry
      • Levels: Resistance 159.24, support 158.90
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC cautious / sluggish CPI / softer WTI correlation
      • Cross: Strong DXY / widening US-CA 10Y spread
      • Levels: Resistance 1.3821, support 1.3799
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): CPI miss / weaker Iron-Ore, Copper
      • Cross: Strong DXY / US-AU 10Y widening / China slowdown fears
      • Levels: Resistance 0.7176, support 0.7156
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ dovishness / weak dairy prices
      • Cross: Strong DXY / risk-off / US-NZ 10Y divergence
      • Levels: Resistance 0.5872, support 0.5840
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB active easing / low CPI / Swiss yields repressed
      • Cross: DXY strength / unwinding safe-haven positions
      • Levels: Resistance 0.7855, support 0.7827
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bullish, EUR/JPY Bullish, GBP/JPY Bearish
      • Domestic: Relative central bank stance / relative yields
      • Cross: DXY influence / risk appetite dynamics
      • Levels: Use individual daily ranges to guide
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields / declining breakevens / soft CB demand
      • Cross: Strong DXY / risk-off dampening safe-haven bid
      • Levels: Resistance 4615.2, support 4534.4
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Weaker industrial demand / rising Gold-Silver ratio
      • Cross: Strong DXY / Risk-off flows
      • Levels: Resistance 7870.300, support 7576.000
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Geopolitical tensions / OPEC policy / tight supply
      • Cross: DXY pullback/ risk-on flows
      • Levels: Brent resistance 97.07, WTI support 90.37
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns / rising LME stocks
      • Cross: DXY strength / risk-off sentiment
      • Levels: Resistance 646.9700, support 636.3200
    • SPX:
      • Direction: Bearish.
      • Domestic (US): High valuations / Fed hawkish / rising US yields
      • Cross: Elevated VIX / global growth concerns
      • Levels: S&P 500 futures resistance 7565, cash support 7463
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Mega-cap earnings risk / elevated real yields / AI hype fade
      • Cross: Higher rates sensitivity / VIX volatility
      • Levels: Resistance 29972.25, support 29745.50
    • US30 (Dow):
      • Direction: Bearish.
      • Domestic (US): Cyclical slowdown / rising rates hurting industrials
      • Cross: Bond yield upside
      • Levels: Resistance 51132, support 50865
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response
      • Cross: Global risk sentiment
      • Levels: Resistance 23419, support 23169
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): EU political uncertainty
      • Cross: US tech weakness / strong DXY / rising rates
      • Levels: Resistance 25360, support 25181
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): No fresh domestic catalyst — sensitive to US response
      • Cross: US tech volatility / risk-off sentiment
      • Levels: Resistance 65309, support 64616
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates too high / ETF selling / on-chain
      • Cross: DXY strength / risk-off / Nasdaq correlation
      • Levels: Resistance 77521, support 76415

    Positioning watch: CFTC data reveals crowded longs in AUD and Copper (>96th percentile) making them vulnerable to negative data surprises. There’s crowded short exposure in GBP, JPY, and Nasdaq.

    The pain trade: A dovish RBNZ or a surprise CPI beat from Australia igniting a short squeeze in AUD, JPY, and GBP while simultaneously reversing the USD rally.

  • Euro Under Pressure as ECB Easing Bias Persists – Tuesday, 26 May

    Where we are: EUR/USD is currently trading at 1.1634, down -0.05% on the day. The pair has remained within a tight 1.1624-1.1645 range in European morning trading, struggling to shake off the six-week low reached last week. This level is below yesterday’s NY close, suggesting continued bearish pressure.

    What’s driving it: The mild easing bias maintained by the ECB is weighing on the Euro. The market is keenly aware that softening wage trackers and services HICP near 3% provide the doves on the Governing Council with a solid base case for a follow-up rate cut in June. Lane’s interview this morning did little to dispel this perception, while Schnabel’s call for a June hike feels increasingly isolated, despite the rising prospect of at least two quarter-point increases priced in by year-end. A stronger dollar, as reflected in the DXY at 99.05, and the widening US-DE 10-year yield spread of +151bp are adding to the downward pressure on EUR/USD.

    • ECB’s Lane interview reiterated the mild easing bias.
    • The US-DE 10-year yield spread is widening, favoring USD.
    • CFTC data shows net non-commercial Euro positioning remains modestly long (+33,513 contracts), at only 12th percentile over the past year, suggesting potential for further downside if the ECB doves solidify their case.

    NY session focus: All eyes will be on the 10:00 ET release of the US CB Consumer Confidence data. A weaker-than-expected print (forecast: 91.9) could offer EUR/USD a temporary reprieve, but the broader trend remains bearish. Key levels to watch include 1.1620 as immediate support, and 1.1650 as resistance. The working trade is short EUR/USD on rallies, while the biggest risk is a surprise hawkish shift in ECB rhetoric or a sharp reversal in US yields. The pain trade here is a sudden and sustained rally above 1.1700, forcing short covering.

  • NY Session Tactical Brief – Monday, 25 May

    Regime: Risk-on, supported by falling VIX (16.76) and slightly rising 10Y breakevens (2.4%) despite higher real yields (2.18%).

    Today’s market themes:

    • Oil supply disruption continues as India seeks alternative sources amidst Hormuz Strait tensions.
    • USD strength muted despite higher US real yields, signaling risk appetite.
    • Crowded positioning presents squeeze potential in GBP, JPY, Copper, and Nasdaq.

    The setup: Oil-sensitive assets are reacting to headlines regarding supply disruptions, while broader market risk sentiment remains positive, weighing on the USD. Crowded shorts in JPY and GBP against a backdrop of muted dollar strength create a setup for potential squeeze. Watch US 10Y yield reaction for risk confirmation.

    Watch list (native time per event):

    • 08:30 ET US Durable Goods Orders (forecast vs prior)
    • 10:00 ET US New Home Sales (forecast vs prior)
    • 11:00 ET US Dallas Fed Manufacturing Index (forecast vs prior)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed rhetoric on inflation / US data resilience / rising real yields
      • Cross: Global risk appetite / JPY and GBP strength potential
      • Levels: Support 118.80, Resistance 119.50
    • EUR/USD:
      • Direction: Neutral
      • Domestic (EU): ECB caution / Eurozone inflation watch / German yields
      • Cross: DXY weakness / US-DE 10Y narrowing / risk-on flow
      • Levels: Support 1.1620, Resistance 1.1670
    • GBP/USD (Cable):
      • Direction: Bullish
      • Domestic (UK): BoE on hold / softer inflation / Gilt yield stability
      • Cross: DXY weakness / US-UK 10Y narrowing / risk appetite
      • Levels: Support 1.2680, Resistance 1.2750
    • USD/JPY:
      • Direction: Bearish
      • Domestic (JP): BoJ inaction / wage pressure / intervention threat
      • Cross: US 10Y flattening / DXY weakness / risk-on stability
      • Levels: Support 156.50, Resistance 157.50
    • USD/CAD (Loonie):
      • Direction: Neutral
      • Domestic (CA): BoC on hold / CPI watch / WTI correlation
      • Cross: DXY strength / US-CA 10Y widening
      • Levels: Support 1.3780, Resistance 1.3850
    • AUD/USD (Aussie):
      • Direction: Neutral
      • Domestic (AU): RBA on hold / commodity prices / cautious tone
      • Cross: DXY weakness / US-AU 10Y narrowing / China watch
      • Levels: Support 0.7070, Resistance 0.7130
    • NZD/USD (Kiwi):
      • Direction: Neutral
      • Domestic (NZ): RBNZ easing priced in / Dairy prices / subdued tone
      • Cross: DXY weakness / US-NZ 10Y narrowing / risk appetite
      • Levels: Support 0.6400, Resistance 0.6450
    • USD/CHF (Swissy):
      • Direction: Neutral
      • Domestic (CH): SNB watching / CPI stable / neutral stance
      • Cross: DXY strength / safe-haven flows / risk sentiment
      • Levels: Support 0.7770, Resistance 0.7830
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bullish
      • Domestic: Relative ECB-BoE, ECB-BoJ, BoE-BoJ policy and yields drive crosses.
      • Cross: DXY influence / overall risk sentiment / correlation dynamics
      • Levels: Monitor respective supports/resistances closely on cross charts
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields stabilizing / Breakevens rising / Safe haven demand
      • Cross: DXY weakness / risk appetite
      • Levels: Support $4540, Resistance $4570
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Industrial demand / Gold-Silver ratio watch
      • Cross: DXY weakness / risk appetite
      • Levels: Support $TBD, Resistance $TBD
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): EIA Inventory impact / OPEC / geopolitical premium
      • Cross: DXY strength / risk aversion from supply shock
      • Levels: Support WTI $110.50, Resistance WTI $113.50
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus / inventories low / supply concerns
      • Cross: Global growth proxy / DXY strength
      • Levels: Support TBD, Resistance TBD
    • SPX:
      • Direction: Neutral
      • Domestic (US): Earnings season / Fed watching / US yields stable
      • Cross: VIX regime / global backdrop
      • Levels: Futures support 5290, resistance 5320
    • NDX:
      • Direction: Neutral
      • Domestic (US): Mega-cap performance / real yields / AI momentum
      • Cross: Rates sensitivity / VIX stability
      • Levels: Support TBD, Resistance TBD
    • US30 (Dow):
      • Direction: Neutral
      • Domestic (US): Industrial earnings / cyclical sentiment
      • Cross: Bond yield reaction
      • Levels: Support TBD, Resistance TBD
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling influence / Gilt yields / commodity mix
      • Cross: Global risk / US tone
      • Levels: Support TBD, Resistance TBD
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields / IFO watch / EU sentiment
      • Cross: US tech influence / DXY direction / risk tone
      • Levels: Support TBD, Resistance TBD
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY level / JGB yields / BoJ anticipation
      • Cross: US tech / risk regime
      • Levels: Support TBD, Resistance TBD
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): Funding rate / ETF flow / on-chain signals
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support TBD, Resistance TBD

    Positioning watch: Crowded shorts exist in JPY (4th percentile) and GBP (15th percentile), while crowded longs are in AUD (98th percentile), Copper (96th percentile), and Bitcoin (90th percentile). A positive surprise in UK or Japanese data could trigger a short squeeze in their respective currencies, while disappointment in China data could hurt AUD and Copper.

    The pain trade: A sustained break above 157.50 in USD/JPY, fueled by hawkish Fed commentary, would squeeze crowded JPY shorts and trigger broader risk-off flows.

  • Euro Bounces on US-Iran Deal Optimism – Monday, 25 May

    Where we are: EUR/USD is currently trading around 1.1640, recovering from a six-week low seen overnight. The pair traded in a narrow 1.1615-1.1645 range in early European hours and is attempting to build on gains from Friday’s close near 1.1620. Resistance looms at last week’s high around 1.1670, while support rests at the 1.1600 level.

    What’s driving it: The Euro is catching a bid this morning, largely on the back of the risk-on mood fueled by optimism surrounding potential US-Iran talks. The ECB’s mild easing bias remains a factor, but is currently overshadowed by external developments. While the latest Eurozone HICP figures showed some softening, coming in at 2% YoY, the core reading remains sticky at 2.3%, potentially giving doves pause for thought at the June 5th meeting. Any re-acceleration in services inflation could halt the ECB’s easing cycle, even if only temporarily. This underpins a floor to the Euro downside for now, and it’s US-Iran headlines driving the short-term narrative.

    • The ECB cut rates by 25bp to 2.50% at its April meeting, but maintained a meeting-by-meeting approach to future policy decisions.
    • Money markets are still pricing in two ECB rate cuts before year-end, indicating a disconnect with the stickiness in core inflation.
    • Speculator positioning in the Euro is modestly long, but not at an extreme, with net non-commercial positions at +33,513 contracts, representing just 4.1% of open interest (12th percentile). Squeeze risk is not a major factor currently.

    NY session focus: Keep an eye on the headlines around potential US-Iran negotiations – any further positive news flow will likely support risk assets and keep the Euro bid. There are no major US data releases scheduled for today, putting the focus squarely on sentiment and geopolitical developments. A break above 1.1670 would open the way to 1.1700, while failure to hold 1.1620 could see a retest of the overnight lows. The trade that’s working is fading dips on Euro strength driven by risk-on sentiment. The trade at risk is chasing the Euro higher without a firm resolution to US-Iran talks. The pain trade for the Euro is a hawkish surprise from the ECB ahead of the June meeting.

  • NY Session Tactical Brief – Friday, 22 May

    Regime: Mixed — VIX steady at 17.44 despite higher oil and Dow futures, indicating risk appetite remains selective and rate-sensitive.

    Today’s market themes:

    • USD Strength: DXY supported by relatively hawkish Fed pricing.
    • Oil Volatility: Geopolitical tensions and inventory concerns drive swings.
    • Data Dependence: Retail sales releases in GBP and CAD in focus.

    The setup: USD strength continues, fueled by hawkish Fed bets as US yields remain elevated. Traders eye the 1.1600 level on EUR/USD; a break could trigger further downside. Focus remains on incoming data and any further escalation of geopolitical tensions in the Middle East.

    Watch list (native time per event):

    • 07:00 BST GBP: Retail Sales m/m (forecast -0.6%, prior 0.7%)
    • 08:30 ET CAD: Retail Sales m/m (forecast 0.6%, prior 0.7%)
    • 10:00 ET USD: Revised UoM Consumer Sentiment (forecast 48.2, prior 48.2)

    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: Neutral
      • Domestic (US): Fed pricing stable / economic resilience
      • Cross: Global growth worries / safe-haven bids on tension
      • Levels: Support 99.00 / Resistance 99.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / rate divergence / risk-off flows
      • Levels: Support 1.1600 / Resistance 1.1650
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): Disappointing retail sales weigh on GBP
      • Cross: DXY strength / US-UK yield spreads / risk sentiment
      • Levels: Support 1.3380 / Resistance 1.3450
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): Intervention risk high / BoJ dovish
      • Cross: US yields / risk-on / DXY strength
      • Levels: Support 158.50 / Resistance 159.50
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / WTI volatility / US-CA spread
      • Levels: Support 1.3600 / Resistance 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Surprise unemployment rise weighs on Aussie
      • Cross: DXY strength / China growth / commodity prices
      • Levels: Support 0.6600 / Resistance 0.6650
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / risk aversion / US-NZ yield spreads
      • Levels: Support 0.5850 / Resistance 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / safe-haven demand eases
      • Levels: Support 0.7800 / Resistance 0.7900
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY bullish, GBP/JPY bearish
      • Domestic: BoE vs ECB / BoJ, relative yield spreads / economic data
      • Cross: DXY / risk aversion / cross-of-crosses dynamic
      • Levels: Monitor for breakout patterns
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields down / safe-haven bids
      • Cross: DXY weaker / risk aversion
      • Levels: Support $4500 / Resistance $4550
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Industrial demand / Gold-Silver ratio
      • Cross: DXY / risk appetite
      • Levels: Support $29.50 / Resistance $30.00
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Refinery attack / supply concerns
      • Cross: DXY / risk appetite
      • Levels: Support $108 / Resistance $115
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus hope/ LME stocks
      • Cross: DXY / global growth
      • Levels: Support $5.00 / Resistance $5.10
    • SPX:
      • Direction: Bullish
      • Domestic (US): Better earnings / Rate cut expectations
      • Cross: Steady VIX / Global sentiment
      • Levels: Futures support 5280 / Resistance 5320
    • NDX:
      • Direction: Bullish
      • Domestic (US): Mega-cap tech / Yield sensitivities
      • Cross: rates sensitivity / VIX
      • Levels: Support 19700 / Resistance 19900
    • US30 (Dow):
      • Direction: Bullish
      • Domestic (US): Industrial activity / Positive earnings
      • Cross: Bond yield reaction
      • Levels: Support 39500 / Resistance 40000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Weak pound / commodity-heavy mix
      • Cross: global risk / US tone
      • Levels: Support 10400 / Resistance 10500
    • DAX:
      • Direction: Bullish
      • Domestic (DE): Bund yields stable / EU confidence
      • Cross: US tech/ DXY / risk-on
      • Levels: Support 24700 / Resistance 24900
    • Nikkei:
      • Direction: Bullish
      • Domestic (JP): JPY weakness / BoJ policy
      • Cross: US Tech / risk sentiment
      • Levels: Support 63000 / Resistance 63500
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF inflows / funding rates
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support $67500 / Resistance $68500

    Positioning watch: AUD and Copper are crowded long (>98th percentile), leaving them vulnerable to a squeeze lower on weaker China data or disappointing earnings. Nasdaq is crowded short (<0th percentile) and ripe for a rally if yields soften further.

    The pain trade: A sharp rally in the Nasdaq fueled by falling real yields would squeeze crowded shorts and force further buying, pushing indices higher.

  • Euro Pressured by ECB Dovishness, Geopolitical Concerns – Friday, 22 May

    Where we are: EUR/USD is currently trading around 1.1605, testing the lower end of its recent range. Overnight, the pair remained largely contained between 1.1590 and 1.1620, failing to capitalize on the mild risk-on sentiment seen in Asia. This level is significantly below the prior NY close, highlighting the persistent selling pressure on the single currency.

    What’s driving it: The dovish undertones from the ECB continue to weigh on the Euro. Despite Eurozone HICP holding at 2%, and Core HICP at 2.3%, the ECB’s recent 25bp cut to the Deposit Facility Rate at its April 17th meeting, coupled with a maintained mild easing bias, signals further potential easing to come. Lane’s speech overnight has done little to counter this narrative. Concerns surrounding the impact of war on European stocks, as highlighted by Bloomberg, add to the bearish sentiment. The drop in US 2Y and 10Y yields is offering limited support, as the market anticipates potential divergence in monetary policy between the ECB and the Fed.

    • ECB’s mild easing bias retained despite headline inflation at target, suggesting a willingness to tolerate a slight overshoot to stimulate growth.
    • Net non-commercial Euro positioning remains modestly long at +40,200 contracts, near the 13th percentile, leaving room for further short-covering rallies if sentiment shifts.
    • Strategist warnings of a growing war impact on European stocks are amplified by FT’s alert that the EU is braced for a ‘dramatically’ worse economic outlook.

    NY session focus: All eyes are on the 10:00 ET release of Revised UoM Consumer Sentiment, although that is distinctly secondary to the overall risk picture and ECB narrative. A weaker print could offer some temporary relief to the Euro, but the overall trend remains down. Key levels to watch include the 1.1575 support zone, a break below which could trigger further downside towards 1.1500. Resistance lies at 1.1650. The short EUR/USD trade continues to work, given the ECB’s stance and broader geopolitical risks. The pain trade would be a significant de-escalation of geopolitical tensions coupled with hawkish signals from ECB officials shifting the policy outlook; that seems increasingly unlikely given current circumstances.

  • NY Session Tactical Brief – Thursday, 21 May

    Regime: Risk-off, fueled by rising real yields and renewed Iran tensions, with VIX at 18.06 and DXY bid.

    Today’s market themes:

    • Oil shock revival: Geopolitical tensions around Iran exacerbate supply concerns, driving crude higher.
    • Rates repricing: Dimon’s hawkish comments reinforce the potential for higher-for-longer, lifting Treasury yields.
    • Mixed PMI signals: Eurozone and UK PMIs offer a mixed bag, with services sector weakness raising growth concerns.

    The setup: Renewed geopolitical risks are stoking inflation fears and pushing real yields higher, putting pressure on risk assets. Look for opportunities to fade rallies in equities, especially tech. Watch the 10Y real yield at 2.18% as a key level. Initial weakness in Dow futures around 39,850 offers a possible short entry.

    Watch list (native time per event):

    • 11:30 AEST AUD: Employment Change (forecast 16.7K, prior 17.9K)
    • 09:15 CET EUR: French Flash Manufacturing PMI (forecast 52.1, prior 52.8)
    • 09:30 London GBP: Flash Services PMI (forecast 51.7, prior 52.0)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Fed policy uncertainty, strong US yields
      • Cross: Risk-off sentiment, safe-haven demand
      • Levels: Resistance 119.50, support 119.00
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Weak Eurozone PMIs, ECB dovishness
      • Cross: Strong DXY, widening US-DE 10Y spread, risk-off flows
      • Levels: Resistance 1.1620, support 1.1580
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): Mixed UK PMIs, uncertainty around BoE path
      • Cross: Strong DXY, US-UK 10Y spread, risk aversion
      • Levels: Resistance 1.2660, support 1.2600
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): BoJ caution, intervention risk remains high
      • Cross: Rising US 10Y yields, DXY strength, risk sentiment
      • Levels: Resistance 159.50, support 159.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious tone, WTI volatility
      • Cross: Strong DXY, US-CA 10Y spread
      • Levels: Resistance 1.3820, support 1.3750
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Mixed labour data, RBA tightening path uncertain
      • Cross: Strong DXY, US-AU 10Y spread, China growth concerns
      • Levels: Resistance 0.6680, support 0.6620
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias
      • Cross: Strong DXY, US-NZ 10Y spread, risk-off sentiment
      • Levels: Resistance 0.5900, support 0.5850
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB dovishness, Swiss yields lagging
      • Cross: Strong DXY, safe-haven demand
      • Levels: Resistance 0.7900, support 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish
      • Domestic: Relative ECB/BoE/BoJ stance, relative yields
      • Cross: DXY, risk regime, cross-of-crosses dynamics
      • Levels: Monitor key supports/resistances on charts
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, CB demand waning
      • Cross: Strong DXY, risk aversion not fully supportive
      • Levels: Resistance $4,510, support $4,480
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Slower industrial demand growth
      • Cross: Strong DXY, risk-off sentiment
      • Levels: Follow Gold
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Iran tensions / potential supply disruption
      • Cross: DXY offsetting factor, risk-off a moderate headwind
      • Levels: WTI Resistance $102, Support $98
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns, LME inventories stable
      • Cross: Strong DXY, global growth proxy
      • Levels: Follow market trend, trade in accordance with real yields.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields, earnings headwinds
      • Cross: Elevated VIX, global risk-off
      • Levels: Futures resistance 5300, cash support 5250
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield sensitivity, mixed earnings
      • Cross: Rates sensitivity, elevated VIX
      • Levels: Follow SPX general resistance and support level
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical headwinds, rising yields
      • Cross: Bond-yield reaction
      • Levels: Follow SPX general resistance and support level
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength, mixed PMI data, commodity exposure
      • Cross: Global risk, US tone
      • Levels: Resistance 10,400, support 10,350
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Weak German PMIs, Bund yield increase
      • Cross: US tech, DXY, risk-off
      • Levels: Resistance is high, monitor yield trend
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): Cautious BOJ commentary, JGB yield focus
      • Cross: US tech reaction, global risk
      • Levels: Follow global risk sentiment
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flows slowing, funding rates stable
      • Cross: DXY strength, risk-off, Nasdaq correlation
      • Levels: Resistance $68,000, support $67,500

    Positioning watch: AUD, Copper, and US Dollar are crowded longs (>80th percentile), creating squeeze risk on any positive surprises or a shift in sentiment. Nasdaq 100 and Japanese Yen are crowded shorts (<20th percentile), risking a sharp rally on positive catalysts.

    The pain trade: A dovish pivot from a Fed speaker today would trigger a violent short squeeze in Nasdaq and Yen, simultaneously undermining the DXY.

  • Euro Under Pressure as PMI Data Disappoints – Thursday, 21 May

    Where we are: EUR/USD is currently trading around 1.1600, near its weakest level since early April. The pair traded in a tight overnight range, failing to hold onto earlier gains after disappointing Eurozone PMI data. It is currently below yesterday’s New York close, suggesting continued selling pressure.

    What’s driving it: The primary driver is the weaker-than-expected Eurozone PMI data, raising concerns about the pace of economic recovery and potentially influencing the ECB’s policy path. French and German Flash PMI figures all came in below forecasts this morning. While the ECB cut rates by 25bp in April to 2.50%, keeping a mild easing bias, a sustained economic slowdown could embolden doves to push for further easing. A slightly negative 2s10s spread suggests concerns over future growth, amplified by EU cutting growth forecasts to 0.9% this year.

    • The French Flash Services PMI printed at 46.6 vs 46.5 expected.
    • The Eurozone economy unexpectedly contracted in May at the fastest pace since late 2023.
    • Speculator positioning in the Euro is modestly long at +40,200 contracts, offering limited fuel for a major squeeze.

    NY session focus: The focus shifts to the US data releases this morning, with the 08:30 ET Philly Fed Manufacturing Index and Unemployment Claims providing further cues on the relative strength of the US economy. Then later we get Flash Manufacturing PMI (Forecast: 53.8 | Previous: 54.0) and Flash Services PMI at 09:45 ET. A strong print in the US could push EUR/USD lower towards the 1.1550 level, while weaker data could offer a temporary reprieve. The key trade is fading rallies above 1.1620. The risk trade is an upside surprise in the US PMIs, triggering a sharp dollar rally and a test of the April lows in EUR/USD. The pain trade would be an unexpected hawkish signal from the ECB, catching the market leaning the wrong way.

  • NY Session Tactical Brief – Wednesday, 20 May

    Regime: Mixed — the VIX at 17.82 suggests a moderately risk-on environment, but rising US 10Y real yields near 2.13% offset the positive sentiment.

    Today’s market themes:

    • FOMC Minutes: focus on the Fed’s inflation outlook and rate-cut timeline.
    • Iran tensions: geopolitical risks weigh on oil and broader sentiment.
    • Nvidia earnings: potential market catalyst, could affirm rally or spur correction.

    The setup: All eyes on the FOMC Minutes at 2 PM ET. The market is pricing in minimal rate cuts this year. Hawkish surprises in the minutes could strengthen the dollar and pressure risk assets. A dovish surprise could weaken the dollar and boost stocks and bonds. Watch the 2Y yield for reaction.

    Watch list (native time per event):

    • 07:00 London [High] GBP: CPI y/y (forecast 3.0%, prior 3.3%)
    • 11:30 AEST [High] AUD: Employment Change (forecast 16.7K, prior 17.9K)
    • 14:00 ET [High] USD: FOMC Meeting Minutes

    Bias by asset:

    • DXY:
      • Direction: Neutral.
      • Domestic (US): FOMC minutes could provide hawkish catalysts.
      • Cross: Risk sentiment shifts amid Nvidia earnings anticipation.
      • Levels: Support at 119.00; resistance at 119.50.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and rising US yields pressure the pair.
      • Levels: Resistance at 1.0830; support at 1.0780.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): CPI miss fueled gilt buying – focus on MPC hearings.
      • Cross: DXY strength and risk appetite weigh on cable.
      • Levels: Resistance at 1.2700; support at 1.2650.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ dovish stance and weak wage data.
      • Cross: US 10Y yield strength and DXY provide tailwinds.
      • Levels: Support at 158.50; resistance at 160.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC cautious outlook and weak CPI.
      • Cross: DXY strength and weaker oil prices pressure CAD.
      • Levels: Support at 1.3750; resistance at 1.3800.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA cautious stance on inflation. Employment data in focus.
      • Cross: DXY strength and China growth concerns weigh.
      • Levels: Resistance at 0.6700; support at 0.6630.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ dovish stance after recent meetings.
      • Cross: DXY strength and risk-off sentiment impact the Kiwi.
      • Levels: Resistance at 0.5860; support at 0.5800.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias supports USD/CHF upside.
      • Cross: DXY strength and risk-off flows support pair.
      • Levels: Support at 0.7850; resistance at 0.7950.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bearish, EUR/JPY Bullish, GBP/JPY Bullish.
      • Domestic: Relative CB policy (BoE more hawkish than ECB; BoJ more dovish).
      • Cross: DXY strength weighing on EUR/GBP; risk-on supporting JPY crosses.
      • Levels: EUR/GBP: 0.8480/0.8530; EUR/JPY: 170.00/171.00; GBP/JPY: 193.50/194.50.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields increase the opportunity cost.
      • Cross: DXY strength weighs on Gold.
      • Levels: Resistance at $4,480/oz; support at $4,450/oz.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Weaker industrial demand prospects.
      • Cross: DXY strength and risk-off environment are headwinds.
      • Levels: Resistance at $32.00/oz; support at $31.50/oz.
    • WTI / Brent:
      • Direction: Neutral.
      • Domestic (asset-specific): Iran talks and Ukraine refinery attack priced in.
      • Cross: DXY strength and mixed risk sentiment.
      • Levels: WTI: $100/$103; Brent: $108/$111.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): Wait for new China catalyst to lift LME stocks.
      • Cross: DXY and global growth prospects.
      • Levels: Resistance at $5.15; support at $5.00.
    • SPX:
      • Direction: Neutral.
      • Domestic (US): Earnings season nearing end; Fed policy key.
      • Cross: VIX stable, global sentiment depends on Nvidia.
      • Levels: Futures 5300/5340; cash support 5280/5320.
    • NDX:
      • Direction: Neutral.
      • Domestic (US): Nvidia earnings key; real yield reaction impacts valuation.
      • Cross: Rates sensitivity and VIX.
      • Levels: 19250/19450.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Awaiting for more industrials to show positive earnings.
      • Cross: Bond-yield reaction to FOMC minutes.
      • Levels: 39700/39900.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling swings impacting export-heavy index.
      • Cross: Global risk and US tone.
      • Levels: 10200/10300.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech and DXY.
      • Levels: 24300/24500.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness continues, JGB yields drive sentiment.
      • Cross: US tech and risk regime.
      • Levels: 59500/60000.
    • BTC:
      • Direction: Neutral.
      • Domestic (asset-specific): ETF flows holding steady, no major funding stress.
      • Cross: DXY and risk sentiment influencing Bitcoin’s price action.
      • Levels: 65000/68000.

    Positioning watch: Crowded longs in AUD and Copper (98th percentile) and crowded shorts in Nasdaq (0th percentile) and JPY (8th percentile) suggest squeeze risks if data improves or Fed turns dovish. Dollar long also extended (85th %ile) exposes downside on risk-on turn.

    The pain trade: A dovish surprise in the FOMC minutes would trigger a short squeeze in Nasdaq, fuel a rally in beaten-down gold, and weaken the dollar, hurting those positioned for higher rates.

  • Euro Faces Headwinds as ECB Easing Bias Remains – Wednesday, 20 May

    Where we are: EUR/USD is trading near 1.0805, holding steady after a choppy overnight session. The pair remains below its prior NY close, consolidating within a narrow range. Key levels to watch are 1.0780 as support and 1.0830 as resistance. Overall the Euro has seen little movement since the close of EU markets.

    What’s driving it: The dominant driver for the Euro remains the ECB’s mild easing bias. The central bank’s latest decision to cut rates by 25bp to 2.50% at the April meeting and retain its meeting-by-meeting language signals further easing may be on the horizon. This contrasts with a rising 10Y real yield in the US. Despite recent HICP prints remaining near the ECB’s 2% target, the services HICP near 3% keeps the doves in check, while a re-acceleration or energy spike could stay their hand.

    • The ECB’s April rate cut to 2.50% and forward guidance suggests more cuts are possible.
    • Eurozone HICP at 2% and Core HICP at 2.3% provide some support but remain above the ECB’s target.
    • Speculative positioning in the Euro is modestly long at +40,200 contracts, leaving some room for further upside but not signalling a major squeeze risk.

    NY session focus: All eyes will be on the release of the FOMC Meeting Minutes at 14:00 ET. A hawkish tilt in the minutes could trigger a dollar rally, pushing EUR/USD lower towards 1.0750. Conversely, a dovish tone could see the pair test 1.0850. The trade that’s working is shorting EUR/USD on rallies, given the ECB’s easing bias and rising US real yields. The risk is that a risk-on move fuelled by positive US data undermines the USD bid. The pain trade is a sustained break above 1.0850, squeezing Euro shorts.