OUTLOOK: Price Signal Summary - EUROSTOXX 50 Futures Breach Support

The step lower for USD/JPY triggered by a phase of dollar weakness is picking up into the NY crossover, with rate now having fully erased the Monday rally tripped by the interim US-China trade agreement.

• JPY's progress off the week's lows despite a healthier equity picture may reflect market that remains happy to stay long JPY, despite USD/JPY's bounce off the pullback low: Our CFTC positioning tracker shows a net long of ~50% of open interest, pushing the 52w Z-score to 1.68, the highest among all currencies surveyed.
• This keeps focus on 145.30 support initially - the 38.2% retracement for the upleg posted off 139.89 - with momentum pointed lower - the 50-dma/200-dma differential is now it's largest since October last year.
• Nonetheless, JPY strength is also playing a part here - we know from a WSJ report that neither currency management nor FX rate target levels were mentioned in US-Japan trade talks - meaning there are few implications or conditions on the BoJ's slow tightening cycle ahead.

• Some of the recovery in Govies have been long end led, the German curve was leaning on the steeper side ahead of the German long end supply, which equated to combined to 27k Buxl.
• Some of the fade off the highs in Equities has also provided a bid into Futures.
• The Buxl has fully caught up after the supply was out of the way, and desks have also faded the selling at the Bund support noted at 129.28, printed a 129.29 low.
• Some desks might look for some resistance at 129.71 in Bund, Yesterday's high, but better is seen towards 129.86 initially.
• Overall Volumes in Europe and the US are on the lower sides, helping exacerbate some of the moves, although Bund still only trades in a 39 ticks range.

OI data points to a mix of net short setting and long cover as SOFR futures ticked lower on Tuesday, with the former providing the dominant impulse in all packs through the blues.