EUR: Some notable size in Exchange traded Option

• Risk sentiment has been given an optimistic tilt in FX markets Wednesday as we await the US tariff announcement later. The likes of AUD and NZD continue to outperform, with the latter extending its intra-day advance to 0.75% against the dollar, closing in on 0.5750.
• While CAD and MXN both received a late boost on Tuesday amid the firm recovery for major equity benchmarks, they have remained close to unchanged levels today, unfazed by the broader bid for higher beta peers.
• Attention for USDCAD is on an important short-term support at 1.4235, the Mar 26 low. A clear break of this level would undermine the bullish technical theme and highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger.
• For USDMXN, a combination of factors have weighed on the peso in recent sessions, primarily the uncertainty of whether US and Mexican officials can find common ground on trade policy. Additionally, a dovish Banxico has prompted a further dovish repricing for the easing cycle terminal rate. As a reminder, President Sheinbaum has announced that Mexico will provide a comprehensive response to any tariff announcements on April 03.
• Last week’s gains resulted in a breach of the 50-day EMA for USDMXN. The clear break of this average undermines the recent bearish threat and instead highlights a stronger reversal. Scope is seen for a climb towards 20.6666, the Mar 5 high. First support lies at 20.2580, the 20-day EMA.
• Looking ahead, apart from the US tariff announcement, the Fed’s Kugler speaks on inflation expectations and March US ADP employment and February orders are released.

Additionally, DFA has announced the following:
"On 8 April 2025, the outstanding volume of the 2.50 % Federal bond of 2025 (2035), due on 15 February 2035, ISIN DE000BU2Z049, will be increased by € 1 billion with effect from 10 April 2025. This increase will be added to the Federal Government's own holdings. The new outstanding volume of the conventional 2.50 % Federal bond of 2025 (2035) is expected to be € 24 billion."

Bearish moves remain contained as participants await the “Liberation Day” tariff announcements out of the U.S. (scheduled for 16:00 ET/21:00 BST), providing some background demand for core global FI.

• EGBs outperform gilts, given perceptions surrounding higher EU sensitivity to tariffs and assumptions surrounding the prospect for deeper ECB easing if GDP growth is hit hard.
• Still, Bunds have failed to retest recent session highs and yields remain above the March 5 low (2.654%), which represents the base of the range seen since the “whatever it takes” fiscal stance was adopted.
• Yields flat to 2bp lower on the day, curve steepens.
• EGB spreads to Bunds biased wider, aided by a downtick in European equities ahead of the U.S. tariff announcement. Bund supply due shortly.
• ECB commentary fails to add to the debate, generally reaffirming well-documented themes. ~62bp of cuts priced through year-end, with ~19bp priced for this month’s meeting.
• Gilts underperform vs. Bunds (10-Year spread ~2bp wider) and with Tsys off yesterday’s highs.
• Futures within yesterday’s range and downtrend line resistance (92.42 today) remains untested.
• Yields ~2bp higher across the curve.
• 2s a handful of bp above March lows.
• 52bp of BoE cuts priced through year-end.
• ECBspeak from Schnabel, Lane, Holzmann and Escriva scheduled for today. Note that Lane will moderate a panel at the Bank’s AI conference, so don’t expect too much in the way of direct monetary policy comments from him.
• Little of note on the European & UK data calendars, which will leave focus on U.S. tariff decisions and data for much of the session.