EUROPEAN INFLATION: Services Upward Revision Flattered By Rounding, 3-Year Low

• In the equity space, S&P E-Minis traded high last week resulting in a fresh cycle high. The climb confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode position highlighting a clear dominant uptrend. Sights are on 6381.50, a 1.764 projection of the Apr 7 - 10 - 21 price swing. Key support is at the 50-day EMA, at 6101.83. Support at the 20-day EMA is at 6246.73.
• A bull cycle in EUROSTOXX 50 futures remains in play and recent weakness appears corrective. Support to watch is 5281.00, the low on Jul 1 and 4. A clear break of this price point would strengthen a bearish threat. Recent gains have exposed key resistance and the bull trigger at 5486.00, the May 20 high. It has been pierced, a clear breach of it would resume the medium-term bull cycle that began Apr 7 and open the 5500.00 handle.

J.P.Morgan recommended tactical fronts/reds SONIA curve flatteners (3Mx1Y/15Mx1Y) late on Friday.

• This recommendation is based on “RV dislocation (1Y/1Yx1Y SONIA now looks 6bp too steep on a relative basis vs. 1Yx1Y SONIA)” and their view that last week’s data “doesn’t warrant the BoE shifting to a faster easing pace than the current quarterly pace”.