EURJPY TECHS: Holding On To Its Recent Gains

• As noted in the MNI Preview, seasonally adjusted fuel prices are expected to have seen a sequential acceleration in February driving a shift in overall energy price inflation from -1.5% M/M in Jan to perhaps close to 1.0% M/M in Feb.
• Fuel prices increased in non-seasonally adjusted terms through Feb but it paled in comparison to increases seen so far in March following the Middle East conflict stemming from US-Israel strikes on Feb 28.
  • AAA retail gas prices increased a non-seasonally adjusted 3.2% M/M in Feb but as of Friday (Mar 6) were another 16% higher than average February levels.
  • Diesel prices are more pronounced still, currently another 22.5% higher after a 3.9% average increase in February.
  • Natural gas prices meanwhile are currently ~5% higher than average February levels, offsetting a -4.3% decline over the month. 

• February can still see residual seasonality – biasing seasonally adjusted inflation rates higher – although it tends to be smaller than January effects. Last month’s seasonal adjustment revisions didn’t materially change this on net with core CPI trimmed 2bps in Jan but lifted 3bps in Feb.
• Nevertheless, it’s still a second important month at the start of the year, with the two months having historically (pre-pandemic) accounted for an average 40% of price increases that are seen over the upcoming year.
• That has historically been split broadly equally over January and February although recent February’s have seen slightly less of a return to pre-pandemic trends, with Feb 2025 accounting for 16.5% of 2025 price increases. 

CBS's report that Iran may be planning to mine the Strait of Hormuz has seen oil prices spike sharply, with WTI up $10/bbl from the session lows (at $86/bbl). It comes that there was no oil supertanker escorted through the Strait of Hormuz as originally reported by the US Energy Secretary (in a now-deleted X.com post).

• Front TY futures fell 6 ticks to a session low of 112-10, but have rebounded 3 ticks to still trade 1+ higher on the day and still well above first support at 111-26+ (Low Mar 6 and the bear trigger).
• Cash curve initially steepened on the above headlines but has pulled back.