EURGBP TECHS: Corrective Cycle

• RES 4: 1.1083 High Oct 2 2024  
• RES 3: 1.1040 High Oct 4 2024
• RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
• RES 1: 1.0955 High Mar 18  
• PRICE: 1.0807 @ 16:14 GMT Mar 25
• SUP 1: 1.0760 20-day EMA   
• SUP 2: 1.0624 50-day EMA and a short-term pivot level      
• SUP 3: 1.0471 Low Mar 4     
• SUP 4: 1.0360 Low Feb 28 and a key support  

A corrective phase in EURUSD remains in play and the pair continues to trade below its recent highs. The trend outlook is unchanged, the direction remains up and moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights on 1.0961 next, a Fibonacci retracement. Clearance of this level would open 1.1040, the Oct 4 ‘24 high. First support to watch is 1.0760, the 20-day EMA. 

Gilts underperformed Bunds Tuesday ahead of Wednesday's Gilt remit announcement and UK inflation data.

• Core EGBs and Gilts softened in morning trade, with EGBs in particular weighed by some renewed optimism over US tariffs, as well as heavier corporate issuance.
• Bunds regained ground in afternoon trade, helped by a pullback in energy prices as Ukraine and Russia announced a US-brokered ceasefire. Gilts failed to participate in the rally, hence the underperformance for the day.
• March German IFO was more solid than expected overall, with the expectations component picking up noticeably.
• The German curve bear steepened on the day through the 10Y segment; in the UK, the belly and 30Y segments underperformed.
• Periphery EGBs benefited from a broader risk-on tone with equities gaining: spreads tightened on the day, though closed off the session's tightest levels.
• Wednesday's focus will be the UK Spring fiscal statement and Gilt remit, which could include the largest gross issuance target since 2020/21. MNI's preview is here. Also bearing attention as usual is UK CPI (MNI preview here).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.6bps at 2.137%, 5-Yr is up 2.3bps at 2.427%, 10-Yr is up 2.7bps at 2.798%, and 30-Yr is up 2bps at 3.131%.
• UK: The 2-Yr yield is up 4bps at 4.301%, 5-Yr is up 4.5bps at 4.386%, 10-Yr is up 4bps at 4.753%, and 30-Yr is up 4.7bps at 5.369%.
• Italian BTP spread down 0.5bps at 109.6bps / Spanish down 0.7bps at 62.3bps 

• -8,000 TYK5 109.5/112.5 strangles, 34 ref 110-24.5, appr 5.93% implied