FOREX: EURUSD Slides Further Below 1.08 as Tariff Headlines Weigh
Mar-26 18:21
- Headlines suggesting that President Trump is preparing a statement on automotive import tariffs for Wednesday afternoon have weighed on major equity indices, in turn boosting the USD index to a three-week high. Specific headlines regarding the EU suggesting that its top trade negotiator expects President Trump to hit the bloc with tariffs of about 20% next week have also dampened sentiment for the single currency.
- As such, EURUSD has slipped further below 1.0800, and is notably tracking below the 20-day exponential moving average for the first time since March 03. This threatens a deeper pullback for the pair, potentially towards more significant support at 1.0631, a key short-term pivot level.
- In similar vein, GBPUSD trades on the backfoot and is below 1.29, however, sterling’s underperformance is mainly due to a softer set of inflation data from the UK, that prompted an early shunt lower for cable. The Spring Statement from Chancellor Reeves had little effect overall, as GBPUSD consolidates 0.42% losses as we approach the APAC crossover.
- Price action narrows the gap to firm support at 1.2869, the 20-day EMA. A sustained clearance of this level would signal scope for a deeper retracement towards the 50-day EMA, at 1.2731.
- AUDJPY remains higher on the session, but the latest equity weakness is helping its key 50-day EMA resistance cap the topside for the cross. Today’s high of 95.19 matched closely with the average, which has proved significant in recent months, having not closed above it since January.
- The firmer dollar theme is trumping the softer sentiment for equities, emphasised by USDJPY rising 0.42% to 150.55. The focus continues to be on 150.95, which represents both the recovery high and the 50-day EMA, a break above which would be the latest counter-trend signal and could signal scope for a stronger rally.
- US final GDP, weekly jobless claims and pending home sales highlight a relatively light economic calendar on Thursday.
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BONDS: Europe Pi: OAT/GILT/BTP Flat Into Rolls
Feb-24 18:18
- OAT: OAT has steadily moved away from short to flat positioning since the end of January. Last week's trade was indicative of long reduction.
- GILT: Gilt structural positioning was flat heading into the roll (our chart only shows positioning up to last Thursday when the roll began in earnest). There were some long reductions pre-roll.
- BTP: BTP has edged off its usual structural long positioning, returning to flat last week. Longs were reduced in the most recent week of trade.
BONDS: Europe Pi: German Short Setting Picks Up
Feb-24 18:14
Per our latest Europe Pi update, German contracts have notably moved toward short territory over the past week, as the rolls approach.
- Schatz has remained flat since our last update on Feb 12.
- But Bobl and Bund have moved from flat to short, joining Buxl.
- Notably all three of the latter contracts saw short-setting last week, while Schatz saw long reduction.
GLOBAL: President's Trump and Macron Make Comments on Ukraine/Defense
Feb-24 18:05
- Latest headlines crossing from President Trump on Ukraine:
- "DOES NOT SEE PROBLEM WITH SENDING EUROPEAN TROOPS AS PEACEMAKERS IN UKRAINE"
- "WILL MEET WITH ZELENSKIY, COULD COME THIS WEEK OR NEXT TO SIGN MINERALS DEAL" (Reuters)
- "MEETING WITH PUTIN WILL HAPPEN SOON" (BBG)
- "TRUMP SAYS PUTIN WILL ACCEPT EUROPEAN PEACEKEEPERS" (Reuters)
- French President Macron also signalling that Europe is willing to become a stronger partner on defense:
- *MACRON: EUROPE IS WILLING TO STEP UP
- *MACRON: EUROPE WILLING TO BE STRONGER PARTNER ON DEFENSE
- *MACRON: READY TO PROVIDE SECURITY GUARANTEES, INCLUDING TROOPS (BBG)
