IRAN: N12 on Trump/Netanyahu Disagreements Over Iran Negotiations

0RN6 97.75/98.00/98.25c fly, sold at 2.25 in 5k.

• Currency markets certainly appeared to lead the way on Friday, as the dollar index looked through the positive headlines from President Trump and associated risk on move, to close at unchanged levels on the session. Subsequent developments in the middle east have weighed further on risk sentiment Monday, lending some further support to the greenback.
• This prompted some further weakening for EURUSD overnight to session lows of 1.1729, a notable 1% turnaround from Friday’s peak at 1.1849. The failure above pre-war levels will have dented the recent enthusiasm for EURUSD, likely exacerbating the correction back towards unchanged levels on the year ~1.1750. Initial key support to watch lies at 1.1664, the 50-day EMA. A break of it would signal a bear reversal.
• Thursday’s Eurozone April flash PMIs highlight the calendar this week, and will provide an insight into the impact of the Iran war, both from an activity and pricing perspective. Although recent ECB rhetoric and ceasefire developments have significantly reduced the likelihood of an April hike, the data will still be important for the ECB to determine the pace and magnitude of energy price passthrough.

UBS note that “CTAs are strongly positioned to buy U.S. large cap indices in the coming weeks. The outlook is considerably less favourable elsewhere - we expect outright selling in the UK, Japan and EM, while European flows should be modestly positive”.

• “In fixed income, CTA activity has been limited, but the conditions for a rapid shift are in place. Their reaction function is clearly skewed towards buying, in a configuration close to what we observed in February i.e. a constructive bond backdrop (global yields going lower by ~30bps), could prompt CTA demand of as much as $250/300mln in global Dv01”.
• “CTAs did not stay short credit for long - much like April 2025. They are back selling spread protections in size”.
• “In FX, USD selling is back on CTAs' agenda. Over the past two weeks, they offloaded $60/70bln of the greenback - and a similar wave of selling looks likely in the weeks ahead. G10 FX should be favoured over EM FX in the near term, with CAD emerging as the standout currency in our projections”.
• “CTAs have been largely inactive in commodities this month, trimming some agricultural exposure and adding modestly to industrials metals”.