US: Trump & Erdogan Meet Today w/Trade, Defence, Russian Energy, Gaza On Agenda

• RES 4: 113-23   76.4% retracement of the Sep’24 - Jan’25 sell-off
• RES 3: 113-07   76.4% retracement of the Apr 7 - 11 sell-off 
• RES 2: 112-23   High May 1 
• RES 1: 112-15+ High Aug 5 and the bull trigger
• PRICE:‌‌ 111-29+ @ 11:33 BST Aug 26
• SUP 1: 111-13+ 50-day EMA
• SUP 2: 110-23+/08+ Low Aug 1 / Low Jul 15 & 16
• SUP 3: 110-03   76.4% retracement of the May 22 - Jul 1 bull leg
• SUP 4: 109-28   Low Jun 6 and 11 

A bullish theme in Treasury futures remains intact and the contract continues to trade above support at the 50-day EMA, at 111-13+. A clear break of this average would expose support at 110-23+, the Aug 1 low. For bulls, sights are on 112-15+, the Aug 5 high and the bull trigger. Clearance of this hurdle would resume the uptrend and pave the way for a climb towards 112-23 initially, the May 1 high.

• While EURUSD’s fall this week is reflective of broader greenback themes, political uncertainty has also ratcheted up following French PM Bayrou’s plan to call a confidence vote. This short-term weakness is for now considered corrective, however, spot continues to hover just above 50-day EMA support, intersecting at 1.1597.
• A clear break of it would signal scope for a deeper retracement and potentially expose key support at 1.1392, the Aug 1 low. On the other hand, a resumption of strength would renew the focus on key resistance and the bull trigger at 1.1829, the Jul 1 high.
• Given the stagflationary environment, the Fed may choose a cautious cutting cycle, waiting for data to back up future decisions, according to HSBC, who expect 25bp Fed cuts in Sep, Dec and Mar. Along with the White House still putting pressure on Fed independence, recently by calling for Fed governor Cook to resign, HSBC think EURUSD will move higher towards their 1.20 year-end target from here.
• JP Morgan says that beyond global growth resilience and some maturing FX hedging dynamics, the most obvious driver for EURUSD trading towards their 1.20 year-end target now that Jackson Hole has passed will be the next US NFP print (Sep 05), with other drivers still intact but of potentially lower intensity.
• Goldman Sachs state that short USDJPY expressions remain one of their preferred trades this year, alongside long EURUSD. The add it is possible that firmer tariff-induced inflation is seen as a policy constraint that pressures equity risk, causing Dollar weakness to be more narrowly concentrated against ‘safer’ currencies like JPY, EUR, and CHF.

• Fed Funds implied rates have been held lower overnight by Trump saying he had removed Fed Governor Cook with immediate effect late yesterday.
• The dovish shift has been pared somewhat with help from Cook again since pushing back, saying he has no authority to fire her and she won’t quit.
• Cumulative cuts from 4.33% effective: 20.5bp Sep, 33.5bp Oct, 53.5bp Dec, 67bp Jan and 81.5bp Mar.
• SOFR implied yields are up to 3bp lower on the day (SFRM6) whilst the terminal yield is 2.5bp lower at 3.02% (SFRH7). The latter unwinds half of yesterday’s 4.5bp increase as it remains close to recent dovish extremes, having closed at 3.00% after Powell on Friday.  
• Dallas Fed’s Logan (’26 voter, hawk) yesterday said she anticipates use of the Fed’s rate ceiling tools in September amidst room to reduce reserves. She added that the Fed should explore ways to avoid overemphasizing the median view on the FOMC in projections.
• NY Fed’s Williams (permanent voter) late yesterday reiterated that the era of low neutral rates “appears far from over” echoing NY Fed research that he had co-authored published earlier in the day.
• Ahead, Richmond Fed’s Barkin (non-voter) repeats a speech from Aug 12 on the economy at 0830ET. It will be followed by audience questions but there won’t be a livestream.