US TSY FUTURES: TU Bought

The ESTR forward curve is little changed relative to the day after the March and April ECB decisions. This underscores President Lagarde’s view that the Governing Council’s reaction function is “well understood”, and Chief Economist Lane’s opinion that the market does not need “some kind of extra guidance from us”. ESTR 1y1y is currently 2.64% (vs 1.95% before the Iran war started). Markets may struggle to maintain a rate above 2.75% given a lack of evidence on second-round inflation effects for now.

• The most likely ECB response to the energy shock – for now – is a “measured adjustment” of policy. We read this as between 1-3x 25bp hikes this year (the first to be delivered on Thursday), with the eventual amount of tightening to be determined by incoming data.
• This range of outcomes combines the ECB’s self-imposed need to have a reaction that “does react” in order to preserve credibility, alongside the actual upside inflation risks stemming from the shock.
• The June projections are likely to be conditioned on a market path pricing 2-3 hikes this year, suggesting the upper end of the “measured adjustment” response could become the base case for some Governing Council members.
• Our ECB preview will be released later today. In the meantime:
  • ECB Speak wrap
  • Analyst Projection Expectations

• RES 4: $100.000 - Round number resistance
• RES 3: $98.487 - 61.8% retracement of the Jan 29 - Mar 23 sell-off 
• RES 2: $78.898/89.374 - High May 19 / 13 
• RES 1: $76.190 50-day EMA         
• PRICE: $68.215 @ 08:22 BST Jun 9
• SUP 1: $61.007 - Low Mar 23 and bear trigger
• SUP 2: $60.000 - Round number support 
• SUP 3: $56.496 - Low Dec 4 ‘25
• SUP 4: $53.345 - Low Nov 28 ‘25 

A bearish theme in Silver remains intact and last Friday’s sell-off reinforces this theme. The move down resulted in the breach of support $70.869, the Apr 29 low. Clearance of this support exposes $61.007, the Mar 23 low and a bear trigger. A breach of this price point would highlight an important bearish development. Key short-term resistance has been defined at $89.374, the May 13 high. Initial firm resistance is at $76.190, the 50-day EMA.

• RES 4: 1.4015 High Dec 2 2025  
• RES 3: 1.3972 1.0% 10-dma envelope
• RES 2: 1.3967 High Mar 31 and a key M/T resistance
• RES 1: 1.3961 High Jun 8
• PRICE: 1.3939 @ 08:19 BST Jun 9
• SUP 1: 1.3867 Low Jun 5  
• SUP 2: 1.3822 20-day EMA
• SUP 3: 1.3772 50-day EMA
• SUP 4: 1.3731 Low May 20 

The current uptrend in USDCAD remains intact and recent strong gains have reinforced this condition. The move higher has confirmed a resumption of the bull cycle that started on May 1. This paves the way for an extension towards 1.3967, the Mar 31 high and the next key resistance. Initial firm support to watch lies at 1.3772, the 50-day EMA. A clear break of this average is required to signal a possible reversal.