EUROPEAN INFLATION: Cross-Ctry Heatmaps Show Broad-Based Headline Pressures

• RES 4: 1.1686 High May 29
• RES 3: 1.1649 61.8% retracement of the Apr 17 - Jun 24 bear leg
• RES 2: 1.1622 High Jun 15 
• RES 1: 1.1614 High Aug 17
• PRICE: 1.1579 @ 16:19 BST Aug 18
• SUP 1: 1.1504 50-day EMA
• SUP 2: 1.1455 Low Jul 31
• SUP 3: 1.1353/25 Low Jul 28 / Low Jun 24 and the bear trigger
• SUP 4: 1.1299 2.000 proj of the Jan 27 - Feb 6 - 10 price swing

A bull cycle in EURUSD remains intact and Monday’s fresh cycle high reinforces current conditions. The pair has pierced 1.1587, the 50.0% retracement of the Apr 17 - Jun 24 bear leg. A clear break of this level would strengthen the bull theme and open 1.1622, the Jun 15 high. Note that recent gains resulted in a clear break of a trendline drawn from the Apr 17 high - a bullish development. Initial firm support is 1.1504, the 50-day EMA.     

Tuesday's Europe rates/bond options flow included:

• ERU6 97.31/97.25ps, bought for 0.25 in 5k
• ERX6 97.12/97.00ps, bought for 3 in 2.5k
• ERZ6 97.50/97.37ps, sold at 10.5 in 3k
• SFIV6 96.10/96.30/96.50 call fly, sold at 1.75 in 10k
• SFIZ6 96.05/15cs vs 95.70/60ps, bought the cs for 2 in 3k (ref 95.91)

The headlines on missiles launched from Iran are likely further confirmation from the previous alert that the UAE’s air defence systems had been activated.

• Reuters reported that two ballistic missiles were launched from Iran.
• As per the UAE’s Defence Ministry, one fell outside territorial waters and a second fell inside Emirati territorial waters.
• The UAE said it is ready to deal with any threats.
• The UAE was disproportionately targeted by Iranian missiles during the earlier hot stages of the conflict.
• It continues to see attacks on its tankers performing shuttles of oil through the Strait of Hormuz to the Gulf of Oman. Such activity erodes Iran’s grip on the waterway and thus its key leverage in the conflict.
• The UAE has also been more closely aligned with the U.S. and Israel, with the country historically viewing Iran as a strategic threat.