CHILE: Scotiabank Sees BCCh Staying On Hold Until September

• Despite the initial USD Index weakness from the open, weighed by the aggressive move lower for USDJPY, the DXY then edged steadily higher through European trade and into the US session. This has culminated in 0.15% gains for the DXY overall.
• USDJPY had initially been very reactive to the waning sentiment for US equities, and the initial dip lower for US yields. However, a solid recovery for equities and yields climbing back to unchanged prompted an impressive USDJPY reversal, to trade positive on the day around 150.00 as we approach the APAC crossover.
• The broad dollar strength worsened the intra-day performance for AUD (-0.68%) and NZD (-0.77%), which although off worst levels, remain comfortably the weakest in G10. For AUDUSD, we continue to narrow the gap to a key short-term support at 0.6187, the Mar 4 low. Importantly, clearance of this level would reinstate a bearish technical theme for the pair.
• Downside momentum picked up for NZDUSD on a break of a cluster of lows around 0.5710, and the intra-day fall now totals 1.10%. 0.5600 remains a key psychological pivot for the pair, while the medium-term target for the move remains at 0.5512.
• In emerging markets, similar sentiment is being felt by MXN, where intra-day weakness has been unperturbed by the latest bounce for major US equity indices. USDMXN traded to a fresh high of 20.4736 as the tariff deadline nears and investors continue to assess the dovish rhetoric from the Banxico committee.
• The Tuesday economic calendar is busy, with both the RBA decision and Japan’s Tankan survey highlights in APAC. Focus then turns to Eurozone inflation readings, before ISM Manufacturing and JOLTS data headline the US schedule.

Bunds underperformed Gilts Monday as an early flight to safety reversed.

• Core FI started strong, as risk aversion picked up following weekend reports that the US could impose more onerous tariffs this week than had been hoped.
• Flash March Euro inflation data were mixed, compared with Friday's below-expected Spanish and French readings: Italy's were above consensus while Germany's (starting with the state-level releases) CPI was broadly in-line.
• The day's rally reversed after a Bloomberg ECB sources piece pointed to increasing appetite among some on the Governing Council for an April rate hold. Cut pricing was pared sharply to around 65% from 85%, impacting EGBs across the curve with Bunds hitting session lows.
• Both the German and UK curves twist flattened on the day.
• Periphery EGB spreads were wider, while French OATs underperformed in semi-core, on a day the RN's Le Pen was deemed ineligible for election.
• Tuesday's schedule includes final March manufacturing PMIs (including the only readings for Spain and Italy), and the flash estimate of March Eurozone HICP. We also hear from multiple central bankers including BOE's Greene, and ECB's Lagarde / Lane. 

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.7bps at 2.047%, 5-Yr is up 1.9bps at 2.339%, 10-Yr is up 1.1bps at 2.738%, and 30-Yr is down 1.2bps at 3.09%.
• UK: The 2-Yr yield is up 0.1bps at 4.196%, 5-Yr is down 1.4bps at 4.284%, 10-Yr is down 1.9bps at 4.675%, and 30-Yr is down 0.6bps at 5.282%.
• Italian BTP spread up 0.7bps at 112.9bps / French OAT up 2bps at 72.5bps  
   

• RES 4: 1.1083 High Oct 2 2024  
• RES 3: 1.1040 High Oct 4 2024
• RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
• RES 1: 1.0861/0955 High Mar 21 / 18 and the bull trigger   
• PRICE: 1.0817 @ 14:34 BST Mar 31
• SUP 1: 1.0733 Low Mar 27 and a key short-term support    
• SUP 2: 1.0649 50-day EMA and a short-term pivot level      
• SUP 3: 1.0602 Low Mar 5     
• SUP 4: 1.0548 50.0% retracement of the Feb 3 - Mar 18 bull run

Recent weakness in EURUSD appears to have been a correction and the trend condition remains bullish. MA studies are in a bull-mode position highlighting a dominant uptrend. 1.0733, the Mar 27 low, marks a key near-term support. A move through it would confirm a clear breach of the 20-day EMA and allow for a deeper correction towards the 50-day EMA at 1.0649. Key resistance and the bull trigger is at 1.0955, the Mar 18 high.