ENERGY: Trump Talks Up China Call

• The EUR is moderately underperforming its G10 counterparts today, as broad dollar weakness sees the DXY consolidating back below 99.50. While the trend structure remains bullish for the pair, recent attempts back above the 1.14 handle have been brief, and the pair has settled within a lower trading range between 1.1280-1.1380 across May.
• The 20-day exponential moving average appears key on the chart, supporting the pair extremely well since the break higher in early March. Indeed, the lows across May so far have continued to respect the EMA, which now intersects at 1.1270. A break of this average would signal scope for a deeper pullback, initially looking for 1.1144, the April 03 high.
• ING say a stronger euro due to factors unrelated to short-term rates will likely argue for even more cuts by the ECB, whose estimates in March included a material negative impact of an appreciation in EUR/USD on the eurozone’s output.
• They note the dislocation between FX and short-term rate differentials doesn’t tend to last too long, and in this case would need to be fuelled by further unwinding of USD reserve positions. If that doesn’t happen, the overbought and overvalued EUR remains at risk of more downside pressure. The 1.130 level remains the anchor in EUR/USD – a decisive break lower can see the 1.120 support being cleared soon, according to ING.

• In addition to the MNI Fed Preview published on Friday (found here), we summarize analyst views ahead of tomorrow’s decision.
• Of the 23 analysts below, the median looks for 75bp of cuts in 2025 before 25bp in 2026 - see the table below.
• After the hawkish readjustment since late last week, the market is similar for this year with Fed Funds futures pricing 78bp of cuts for 2025 although is still more dovish in 2026 with close to another 50bp priced.
• Analyst views for 2025 range from zero cuts (Berenberg and Morgan Stanley) to 125bp of cuts (Citi, JPMorgan, TD Securities and Wells Fargo).
• Next cut timing: 9 expect June, 3 in July, 8 in Sept (with SEP meetings still carrying weight), 1 in Dec, 1 in 2026 and 1 seeing no cuts at all.
• A few views stand out, including Morgan Stanley who switch from one of the most hawkish to dovish from end-2025 to end-2026. 

MNI speaks to former director of the Fed Board's division of monetary affairs William English.-- On MNI Policy MainWire now, for more details please contact sales@marketnews.com