OPTIONS: US Options Roundup - Mar 26

Today's near 4bp increase in Fed 2025 futures-implied rate cut expectations have brought the cumulative implied this year to 50bp (3.83% vs current Fed funds of 4.33%) - the first time 2 cuts have been implied since Feb 5, if only barely.

• Recall that after January's nonfarm payrolls and CPI data, futures had nearly fully priced out more than one cut this year (pricing reached -25.5bp on Feb 12), with the only cut of 2025 expected only in December.
• The repricing in of rate cuts has been steady over the past 10 days or so, corresponding with some signs of growth weakness (retail sales, Services PMI) and a pullback in stocks.
• July's FOMC is currently seen as the timing for the next cut, with the subsequent one being only fully priced by December.
• March and May are basically out of the question, but there's around an 80% implied cumulative chance ascribed to June's meeting.

US President Donald Trump and French President Emmanuel Macron are shortly due to deliver a joint press conference at the White House, following a bilateral meeting. LIVESTREAM

• Discussions today likely revolved around the war in Ukraine and European security proposals for Kyiv. Macron said on X ahead of his trip: “I'm going to tell [Trump]: 'You can’t be weak in the face of President Putin. It’s not you, it’s not your trademark, it’s not in your interest. How can you then be credible in the face of China if you’re weak in the face of Putin?’”
• The Wall Street Journal reports that Macron and UK Prime Minister Keir Starmer, who meets with Trump on Thursday, will, “pitch Trump [this week] on a plan for 30,000 European peacekeepers in Ukraine [with] an American “backstop” to protect those troops…”
• Trump’s National Security Advisor Mike Waltz said: “There’s been discussions from Prime Minister Starmer and President Macron about European-led security guarantees. We certainly welcome more European assistance.”

• RES 4: 0.8378 High Feb 6 and a key resistance    
• RES 3: 0.8361 50.0% retracement of the Jan 20 - Feb 3 bear leg  
• RES 2: 0.8337 50-day EMA  
• RES 1: 0.8324 20-day EMA   
• PRICE: 0.8296 @ 15:55 GMT Feb 24
• SUP 1: 0.8265/8248 Low Feb 21 / 3 and bear trigger
• SUP 2: 0.8223 Low Dec 19 and a key support  
• SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range   
• SUP 4: 0.8163 123.6% retracement of the Dec 19 - Jan 20 bull leg 

EURGBP is trading closer to its recent lows. A resumption of weakness would expose the key short-term support at 0.8248, the Feb 3 low. Clearance of this level would strengthen a short-term bearish condition. Note that the early February bounce continues to highlight a possible bullish reversal theme. Clearance of  0.8378, the Jan 6 high and a key short-term pivot resistance, would be a bullish development.