EURIBOR: ERU6/Z6 Sold

• Currency markets are looking through the early strength in both US and European bond markets, with the USD Index broadly stable. JPY mildly outperforms, putting pause to the rally in GBPJPY this month (rate is up 2.6% from the monthly low), but the bull cycle in cross-JPY remains intact while USDJPY holds above 154.40 50-day EMA support.
• Meanwhile, EURGBP is tilted higher, pressuring the overnight high 0.8730 on light volumes, and keeping prices either side of the 0.8722 100-dma in the interim, a level that's clearly anchored spot over the holiday period.
• Light volumes and quiet calendars should keep markets steady over the coming few days, however the unexpected vol in precious metals markets is keeping some EM FX under pressure (USDZAR has recovered slightly), and any progress in Russia-Ukraine ceasefire negotiations would be carefully watched.

Further screen selling knocks TYH6 away from early London highs, 2K given ta 112-22. Bulls pierce the 50-day EMA (112-21). Next resistance located at 112-31, although bears remain in technical control, with key short-term support noted at 111-29.

Core global FI markets firm through early London trade, although market liquidity remains thin given the time of year.

• Spillover from Friday’s move lower in crude oil is probably lending some support to EGBs as they play catch up to the uptick in Tsys, while e-minis edge lower, providing further cross-market support.
• No meaningful spillover from the summary of opinions covering the latest BoJ meeting, which pointed towards the likelihood of further tightening.
• Bunds trade as high as 127.77, breaching first resistance at 127.52. Bulls now look to the nearby 20-day EMA (127.87). A break there would pose a deeper threat to the bearish technical theme.
• First support located at 126.75.
• German yields 0.5-2.5bp lower, curve bull flattens.
• EGB spreads vs. Bunds are printing mixed and it’s hard to gauge true levels in current liquidity conditions.
• U.S. President Trump’s positive rhetoric surrounding the Russia-Ukraine conflict was noted over the weekend, despite familiar sticking points remaining in place. Ukrainian counterpart Zelensky described weekend talks as "90%" of the way to a deal.
• Little of note on the G20 calendar today.