ECB: Savings And Investment Union Needed Now, Then Banking Union - Nagel

• In FX, EURUSD continues to trade above last week’s low and recent weakness appears corrective. A key support at the 50-day EMA, at 1.1102, remains intact. A clean break of this average would undermine the uptrend and highlight a stronger reversal. Key trend signals still highlight an uptrend. A key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction and highlight a bullish break.
• GBPUSD traded higher Monday, extending the recovery from 1.3140, the May 12 low. A bullish engulfing candle on May 13 highlights a reversal signal. The pattern remains valid and if correct, signals the end of the recent corrective cycle and a resumption of the uptrend. Key support to watch is 1.3126, the 50-day EMA. A continuation higher would refocus attention on the key resistance and a bull trigger, at 1.3444, the Apr 28 / 29 high. USDJPY continues to trade below the May 12 high and the pair maintains a softer tone. The latest pullback signals the end of the corrective cycle since Apr 22. A stronger reversal lower would expose 142.36, the May 6 low. Note that the 20-day EMA, at 145.18, has been cleared. The breach strengthens a bearish theme. Key short-term resistance has been defined at 148.65, the May 12 high. Initial resistance is at 146.23, the 50-day EMA.

• The Eurozone current account surplus increased further to E50.9bn (sa) in March after an upward revised E40.6bn in Feb (initial E34.3bn) and another large E40.3bn in Jan.  
• There isn’t a Bloomberg consensus entry but the March increase shouldn’t have come as too much of a surprise considering the already known surge in the goods surplus on a jump in Irish pharmaceutical exports linked to US tariff front-running.
• The three-month current account surplus was worth circa 3.4% GDP (up from 2.2% GDP to Dec 2024). It’s comprised from a 3.1% goods surplus (vs 2.2%), a 1.0% services surplus (vs 1.2%), 0.2% primary income surplus (vs 0.1%) and a secondary income deficit of 0.9% (vs 1.3%).
• These current account and goods surpluses are right at the top end of recent historical ranges albeit with a temporary boost from tariff front-running.
• One of the more interesting areas within the financial account were equity flows.
• Net equity holdings from abroad had increased a strong E53.6bn in Feb after E11.3bn in Jan for the most since Aug 2024 and before that Dec 2023, but this abated in March with net selling worth E8.9bn (the first net sales since Mar 2024).
• This apparent profit-taking chimes with price action at the time, with global equity markets more generally rolling over in March. In the European case, the Eurostoxx 50 fell over the course of the month although to less extent than the US S&P 500. It came with the the realization of early March announcements on both EU and German defence and infrastructure spending after strong gains in Jan and Feb on growing expectations of greater European fiscal stimulus.
• Profit taking was likely bolstered ahead of the touted reciprocal tariff announcements due Apr 2. Indeed, it was seen on the other side of the ledger as well, with the E40.4bn net sale of resident equity holdings abroad the largest net sale since Sep 2022. 

Source: Bloomberg