OIL: Oil End of Day Summary: Crude Rises

• The Euro was a beneficiary on Monday as Germany's parliament approved plans for a massive spending surge, diverging from prior fiscal conservatism in an attempt to revive economic growth and scale up defence spending. EURUSD trades in close proximity of recovery highs, currently located at 1.0955.
• Spot rising above the bull trigger at 1.0947 strengthens the current uptrend and signals scope for a move towards pivot resistance at 1.10 and a more notable cluster of medium-term resistance around the 1.12 mark.
• Tuesday’s session was categorised by a swift reversal lower for the major US equity benchmarks, which prompted Aussie to be among the weakest in G10, allowing AUDUSD to erase around half of yesterday’s strong rally. Key resistance at 0.6409, the Feb 21 high, continues to cap the topside. Clearance of this hurdle would strengthen a bull cycle and confirm a resumption of the uptrend that started Feb 3.
• Weaker risk sentiment knocked Cross/JPY off the overnight highs, however, USDJPY trades close to unchanged as we approach the APAC crossover. It is worth noting we have the Bank of Japan tomorrow and so positioning dynamics may have affected price action today. In contrast, and with the SNB decision not until Thursday, the Swiss Franc is the strongest of the major currencies. USDCHF is 0.5% lower on the session, and will focus on 0.8736, the December lows. To highlight USDCHF’s vulnerability to a further correction lower, we would highlight that the pair remains 1.65% above the Nov 06 US election lows, located at 0.8620.
• The Bank of Japan kicks off a busy economic calendar on Wednesday, which culminates with the March Fed decision and release of its summary of economic projections. Final February Eurozone inflation readings and its additional details are also scheduled on Wednesday.

• ESTR ECB-dated OIS was relatively little changed today, only drifting up to 1bp lower for late 2025 and early 2026 contracts, with an intraday slide in crude oil futures and broader equity weakness putting downward pressure on implied rates.
• It leaves 13.5bp of cuts priced for the Apr 17 decision, building to a cumulative 47bp of cuts in for 2025 from current levels.
• Our sense from this morning's MNI Connect event with Bank of Finland Governor Rehn (who we view as an important barometer of the median Governing Council view, often striking a centrist/dovish leaning tone) is that the bar to him not voting for a cut in April is quite high.
• Today’s data saw German ZEW expectations beat already elevated expectations for its highest since Feb 2022 but the current situation disappointed. The Eurozone trade surplus meanwhile was slightly larger than expected but there continues to be little appetite for increasing imports of manufactured goods amidst high uncertainty.
• Tomorrow sees Eurozone final HICP inflation for February and plus labour costs for Q4 both at 1100CET/1000GMT. There are also multiple appearances from Centeno, de Guindos (x2), Villeroy and Elderson which could leave a net dovish tone. Guindos told the Sunday Times that whilst much is still uncertain about European defence spending, “it will likely be positive for growth and have a limited impact on inflation.”

Tuesday's Europe rates/bond options flow included:

• ERJ5 97.87/97.9375cs, bought for 1.25 in 12k
• ERK5 97.6875/97.5625/97.4375p fly, bought for 1.75 in 6k
• ERM5 98.125/98.375 call spread vs 97.625 puts, 10K given at 1.75 vs. 97.785-97.79. Market contacts point to an unwind of an existing position
• 0RJ5 98.00/98.12cs vs 97.5625p, bought the cs for 1 in 5k