SILVER TECHS: Trend Set-Up Remains Bullish

Light hawkish repricing in ECB implied rates after US President Trump and EC President von der Leyen agreed to delay the imposition of 50% US tariffs on the EU to July 9 (from June 1 previously). ECB-dated OIS price 56bps of easing through December, down from 57bps at Friday’s close and a knee-jerk dovish extreme of 66bps following Trump's initial announcement.

• OIS are nonetheless 4bps more dovish than last Monday’s close. Since then: (1) downside growth risks have been underscored by the weak May flash PMIs (2) Q1 negotiated wages were softer than some of the expectations we had seen and (3) the worst-case scenario if no US/EU trade deal is struck is now considerably more deterimental to the near-term growth/inflation outlook than before.
• A 25bp cut remains fully priced through June, with focus now on whether the ECB will return to a quarterly easing pace afterwards or continue with sequential cuts in July.
• OIS butterfly spreads comfortably assign a higher rate cut premium to projection meetings (June, September, December) compared to non-projection counterparts.
• Euribor futures are off session lows, but remain -1.5 to -4.0 ticks through the blues.
• ECB’s Lagarde & Nagel are due to speak today, with those comments set to focus on a fragmented world and trade disputes, as opposed to outright monetary policy matters.

• RES 4: 0.6603 High Nov 11 ‘24  
• RES 3: 0.6582 High Nov 12 ‘24
• RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 1: 0.6537 Intraday high  
• PRICE: 0.6519 @ 08:08 BST May 26
• SUP 1: 0.6417 20-day EMA  
• SUP 2: 0.6372/57 50-day EMA / Low May 12    
• SUP 3: 0.6275 Low Apr 14 
• SUP 4: 0.6181 Low Apr 11 

AUDUSD trend signals remain bullish. The pair is trading higher today and has cleared a key short-term resistance at 0.6515, the May 7 high. This also confirms a triangle breakout and marks a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement. Key support lies at 0.6372, the 50-day EMA. A clear break of this average is required to signal a potential short-term reversal. 

The USD is lower against all G10 FX peers outside of the JPY, as wider markets react to U.S. President Trump delaying the imposition of 50% tariffs on the EU to July 9.

• This pushes the BBDXY further through the December ’23 lows, with bears looking to the ’23 low in that index (located just above 1,200).
• EUR/USD extends on the recent bullish move, trading as high as 1.1419, next resistance of note seen at the 76.4% retracement of the Apr 21 - May 12 bear leg (1.1453).
• GBP/USD tops out at 1.3593, with the 1.382 projection of the Feb 28 - Apr 3 - 7 price swing (1.3605) presenting the next upside area of note.
• USD/JPY has recovered from the lowest levels registered in May (142.23 printed in Tokyo trade), with the wider risk reaction to the delay of the tariffs on the EU providing some counter. Spot last deals at 142.74, with bears remaining in technical control. A move through today’s lows would expose the 76.4% retracement of the Apr 22 - May 12 bull leg (141.96). Bulls need to retake the 20-day EMA (144.66) to start turning the tide in their favour.
• Risk proxy FX (AUD, NZD, NOK & SEK) outperform on the U.S.-EU tariff relief.
• Comments from ECB’s Lagarde, Nagel & Simkus are due today, but will focus on a mix of trade, a fragmented world and regulation, so may not shed too much light on direct monetary policy matters.
• There isn’t much on the G20 data calendar today.
• Holidays in the UK & U.S. will thin out wider market liquidity.