Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Bank of Korea Nominee Shin Hyun-song Calls for Flexible Monetary Policy Amid Iran War Risks 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Bank of America Maintains Forecast for Two Fed Rate Cuts in 2026 Despite Inflation Risks 
RBA's Hauser Flags Uncertainty on Rate Settings Amid Iran War Economic Risks 
ECB Warns of Rising Inflation Risks Amid Iran War Energy Shock 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Bank of Japan Eyes Further Rate Hikes Amid Middle East Tensions and Inflation Pressures 
ECB Eyes Rate Hike Amid Iran Conflict-Driven Energy Price Surge 
Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing 
 forwards - EconoTimes)
We maintain a neutral forecast for EURUSD over the coming quarter, and indeed continue to recommend tactical short option trades in EURUSD for the next month or two on the basis of some fundamental driving forces:
The rationale:
1) Poor European growth is likely to matter slightly more than a now-diffident Fed, and
2) The Fed may be on hold but the absolute level of USD interest rates remains supportive of short term capital flows to USD.
Furthermore, we continue to indicate a mildly constructive forecast for the euro based on the key assumption that growth rebounds above 1.5%. This together with a still robust underlying balance of payments position should allow cautious mean-reversion higher in a is a modestly undervalued EUR (the EUR REER is 4.5% cheap to a 20Y average whereas the dollar is 3.5% expensive).
For shorter-term horizons (up to 3 months), we recommend hedging USD-denominated expenses via FX forwards, as we see a risk of more USD strength. For longer-term maturities (over 3 months), consider incorporating optionality, which enables one to gain from a EURUSD increase; this could be done by means of knock-in forwards, which allow one to sell EURUSD above the current spot should USD weaken over time (as per our call), while still securing a worst-case rate.
Alternatively, on hedging grounds ahead of Fed’s monetary policy that is scheduled for this week who is most likely to maintain status quo in its monetary policy, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards 1.1175 levels in the medium term.
Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position. Courtesy: JPM & Danske
Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at 70 levels (which is bullish), while hourly USD spot index was at -96 (bearish) while articulating at (08:24 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
