STIR: Correction in late white/early red Euribor should be limited

• The news late Monday that the US is ahead of schedule and the Middle East conflict could come to an end very soon has provided a notable boost to risk sentiment, weighing on the US dollar and boosting risk sensitive FX.
• The Australian dollar is the best performer across G10, with an additional hawkish impulse from RBA's Deputy Governor Andrew Hauser’s most recent rhetoric. He said, “It’s fair to say, further increases of prices from Iran, if that is what we end up seeing, and that is a big if, is not a helpful development from the perspective of our policy discussion.”
• AUDUSD has remained resilient, continuing to hold above its 50-day EMA, and is again starting to approach a cluster of significant resistance between 0.7125-50. On the topside, 0.7208 represents a notable target, the 61.8% of the Feb 25 ‘21 - Apr 9 ‘25 bear leg.
• In the crosses, EURAUD (shown below) has continued its downward trajectory, with this morning’s lows essentially bridging the gap to the 2025 lows at 1.6358. The pair is now down 7% on the year and scanning out on the chart, the next key level is located at 1.60 which provided excellent support across 2024.
• Elsewhere, AUDNZD has risen to a fresh cycle high at 1.1987, and hovers just below the psychological 1.20 mark, the highest level since 2013.

OI data points to net short setting in TU & FV futures, long cover in TY futures and long setting in US & WN futures as the curve twist flattened on Monday.

• UXY was unchanged come settlement, which makes it hard to provide any real positioning inference outside of noting that exposure in contract increased as OI moved higher.