EU HEALTHCARE: Alcon: Correction

Euribor futures are +2.5 to +5.0 ticks through the blues, rallying alongside core EGBs without an obvious trigger. Last Wednesday’s high in ERH6 (98.260) remains intact though. We highlighted last week that Euribor futures have traded in a contained range since the June ECB meeting, with data/tariff developments since then not enough to shift central expectations away from one more 25bp cut this cycle.

• ECB-dated OIS price 30bps of easing through March 2026, 1.7bps more dovish than Friday’s close.
• As noted above, progress on an EU-US tariff deal remains limited. This week’s regional calendar includes the ECB’s Q2 BLS, July flash PMIs and ECB decision.
• The BLS will provide an important update on credit demand and lending standards across the region, against a backdrop of ongoing trade uncertainty. It will be interesting to see whether the BLS echoes the broad strokes of more regular and timely lending data. After displaying signs of plateauing through the first four months of 2025, the  Eurozone credit impulse metric of 3mth flows vs 3mths a year ago fell four tenths to 1.5% of GDP in May, the lowest since December.
• Current consensus pencils in another incremental improvement in the Eurozone composite PMI to 50.7, from 50.6 in June. Both services and manufacturing components are expected to rise, but the latter is still seen below the neutral 50 handle (cons 49.7 vs 49.5 prior).
• The ECB is expected to hold its policy rate at 2.00% on Thursday, after President Lagarde emphasised that policy was in a "good place" at the June decision. Major deviations from existing policy statement guidance are also unlikely. Focus will be Lagarde’s characterisation of risks at the press conference, which will likely shape the market reaction. 

The USD trades on the defensive through the Asia-London crossover, although the major USD pairs stick within overnight/Friday ranges. No clear driver, with equities and EGBs rallying at the same time.

• The NZD was the underperformer overnight, but NZD/USD trades back to unchanged levels.
• Weaker-than-expected NZ CPI and related dovish repricing in NZD STIRs data drove the NZD weakness in Asia trade, as the short end moved to price in over 80% odds of a cut at the RBNZ’s next decision. Non-tradable inflation (Y/Y printed at a multi-year low, with the RBNZ’s own sectoral factor inflation model also easing.
• Meanwhile, the JPY is the outperformer within G10 FX. Japan's ruling LDP coalition lost it majority in the upper house election, matching wider expectations. However, current PM Ishiba vowed to continue as leader (despite the obvious difficulties faced). Overall market reaction was limited, with the observance of a Japanese public holiday limiting liquidity. The latest JPY demand seems to be driven by international participants. Spot last 147.80, moving back towards Asia lows. The pair remains in a bullish technical theme, Initial support at the July 16 low (146.92)
• The BoC business survey headlines a very limited G10 calendar today

• RES 4: 6439.884 1.500 proj of the May 23 - Jun 11 - 23 price swing
• RES 3: 6402.44 1.382 proj of the May 23 - Jun 11 - 23 price swing
• RES 2: 6381.50 1.764 proj of the Apr 7 - 10 - 21 price swing
• RES 1: 6357.00 High Jul 18      
• PRICE: 6348.50 @ 07:25 BST Jul 21  
• SUP 1: 6288.25 Low Jul 17  
• SUP 2: 6246.73/6101.83 20- and 50-day EMA values   
• SUP 3: 5811.50 Low May 23 
• SUP 4: 5645.75 Low May 7 

S&P E-Minis traded high last week resulting in a fresh cycle high. The climb confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode position highlighting a clear dominant uptrend. Sights are on 6381.50, a Fibonacci projection. Key support is at the 50-day EMA, at 6101.83. Support at the 20-day EMA is at 6246.73.