EURGBP TECHS: Corrective Cycle Remains In Play

• 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: 1.0787 @ 16:37 GMT Mar 26
• SUP 1: 1.0763 20-day EMA   
• SUP 2: 1.0631 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  

EURUSD extends the pullback from its recent high. The move down is considered corrective and the trend condition is unchanged - it remains bullish. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are 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 1.0763, the 20-day EMA.

• European FI futures have hit session highs after a double hit from first White House’s Leavitt saying Trump will announce auto tariffs at 4pm ET today and then the FT reporting EU’s Sefcovic expecting broad Trump tariffs of about 20%.
• They have however be helped a touch lower after a separate WSJ report saying the US is weighing excluding auto parts from tariffs.
• Euribor futures now trade 5 ticks higher on the day through 2026 contracts, pushing the implied terminal yield 4bp lower to 2.01% for its lowest since the Mar 4 when European defense and infra spending packages were announced.
• This terminal yield is seen landing in the ERZ5 which tallies with ESTR ECB-dated OIS showing 54bp of cuts for 2025, leaving the depo rate a little under 2.0% and an effective rate at 1.88% (neutral estimated between 1.75-2.25%).
• Bund futures meanwhile touched 128.46 but have since eased to 128.38 (+.25) as they begin to more seriously eye resistance at 128.72 (20-day EMA).

Wednesday's Europe rates/bond options flow included:

• ERJ5 97.75/97.68ps sold at 1 in 8k
• ERM5 97.9375/98.00cs, bought for 2 in 10k
• ERM5 98.0625/98.12cs, bought for half in 3k
• ERZ5 97.875/97.625/97.375 put fly, paper pays 4.75-5 on 16k
• SFIU5 96.00/96.65/96.80 1x3x2 call fly 6K sold at 8.5