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Last week’s move down in WTI futures marked an extension of the current corrective cycle. The 20-day EMA has been breached and attention is on support around the 50-day EMA, at $72.30. A clear break of the 50-day average would suggest scope for a deeper retracement. On the upside, a reversal higher would refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance. A bull cycle in Gold remains in play. Last week’s extension higher and Monday’s gains confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2845.2 next, a Fibonacci projection. The first key support to watch is $2692.6, the 50-day EMA. The 20-day EMA is at $2736.4.

• WTI Crude down $1.43 or -1.95% at $71.76
• Natural Gas down $0.12 or -3.61% at $3.231
• Gold spot up $5.58 or +0.2% at $2821.01
• Copper up $2.1 or +0.49% at $432.75
• Silver up $0.04 or +0.13% at $31.6379
• Platinum up $0.55 or +0.06% at $968.01

A sharp reversal lower in the Eurostoxx 50 futures contract on Monday signals the end of the recent bull run - for now - and the start of a corrective cycle. Price gapped lower and traded through the 20-day EMA, at 5159.26. A continuation of the bear leg would pave the way for a move towards the 50-day EMA, at 5056.82. On the upside, key resistance and the bull trigger has been defined at 5327.00, the Jan 31 high. The S&P E-Minis contract started the week on a bearish note. The gap lower Monday and a breach of support at 5948.00, the Jan 27 low, strengthens a bearish threat and cancels - for now - a recent bullish theme. An extension down would open 5892.37, a Fibonacci retracement point. Initial resistance is at 6069.00, today’s intraday high. Gains are considered corrective, however, a stronger rally would expose key resistance at 6178.75, the Dec 6 high.

• Japan's NIKKEI closed higher by 278.28 pts or +0.72% at 38798.37 and the TOPIX ended 17.63 pts higher or +0.65% at 2738.02.
• Across Europe, Germany's DAX trades lower by 23.12 pts or -0.11% at 21405.41, FTSE 100 lower by 28.2 pts or -0.33% at 8555.43, CAC 40 down 2.96 pts or -0.04% at 7852.33 and Euro Stoxx 50 up 0.17 pts or +0% at 5218.09.
• Dow Jones mini down 120 pts or -0.27% at 44445, S&P 500 mini down 14.75 pts or -0.24% at 6008.25, NASDAQ mini down 30 pts or -0.14% at 21378.25.

Treasury/Bund widening has reasserted itself since the middle of last week, with the 10-Year spread ~20bp wider over that horizon:

• Headline drivers of the widening move are the ECB decision and the impact of U.S. President Trump’s tariff choices:

1. The latest ECB decision suggested neutral rate discussions are still premature whilst policy is deemed “restrictive". Note that an ECB study on neutral rates is due to be released Friday.
2. Tariff readthrough: generally inflationary for the U.S. and growth-negative for much of the rest of the world. President Trump continues to point to the potential for tariffs on the EU.

• Citi eye further spread widening, noting that “that 10-Year Tsy/Bunds looks tight relative to front-end OIS differentials. The last few sessions have seen sharp re-widening, but the move may have legs, with the spread still around 50bp below the peak seen during Trump 1.0.”
• Slowing of EGB supply may also start to factor in after the usual frontloading was seen in January.