EURUSD TECHS: Northbound

SFRU5 95.87/95.75/95.68p ladder, sold at 5 in 2.5k.

The EC’s May consumer and business survey saw economic confidence rise to 94.8 (vs 94.1 cons, 93.8 prior). The data will have captured the tariff de-escalation between the US and China earlier this month, but did not account for the latest EU/US 50% tariff developments (the survey closed on May 20). Overall, there doesn’t seem to be enough weakness in the data to materially increase the likelihood of a 25bp cut in July from current levels (a cut in June remains essentially locked in). The fall in expected price metrics should keep the Governing Council focused on activity data, given growing confidence in the inflation outlook. 

• Developments in expected price metrics were dovish, falling across sectors. Services unwound April’s rise to move back to 3.0 (vs 4.6 prior).
• Consumer confidence was confirmed at -15.2 (vs -16.6 prior). There were improvements across forward and backward-looking components, but the “future unemployment expectations” subcomponent did rise for a second consecutive month to 28.5 (vs 27.4 in April, 24.2 in March).
• Meanwhile, the overall expected employment indicator ticked up a touch to 97.0 (vs 96.5 prior), still comfortably below the 2024 average of 100.3.
• Sentiment ticked higher in all sectors other than services.

Looking for Unchanged Rates into Year end:

• SFRU5 95.87/95.75ps 1x2, with 95.93/95.75ps 1x2, bought the strip for 3.25 in 5k.