A recent agreement between the US and China involves reciprocal tariffs set at 10% for both nations. Participants describe the outcome as favourable for both countries, with emphasis on smooth relations.

The discussion did not cover currency matters, but it marked the first recognition by China of the US position on fentanyl. A mechanism has been established to prevent future escalations similar to those seen in recent weeks.

Market Reaction

The positive developments have impacted markets, with the dollar and risk trades increasing. The USD/JPY is up by 1.3%, standing at 147.20, while S&P 500 futures show nearly a 3% rise.

Markets responded quickly to the agreement, reflecting broader sentiment that tensions might ease in the foreseeable future. The snap rally in S&P 500 futures suggests a positive turn in outlooks among equity traders, who have reacted with renewed appetite for risk. Simultaneously, a sharp move higher in USD/JPY is telling; it speaks to expectations that short-term interest rate differentials could widen yet again, or at least stabilise in favour of holding dollars.

What we’ve seen is a welcomed step forward after weeks of volatility, especially with multiple risk assets moving in tandem. Our reading of the price action indicates that macro participants began positioning shortly after reports emerged of agreement terms, suggesting that the agreement had been at least partially anticipated by larger institutions with quick access to headlines.

From our point of view, the decision not to include currency matters hints at some restraint, likely intended to preserve negotiating space going into the next round of discussions. Meanwhile, China’s acknowledgement of concerns tied to non-trade issues such as fentanyl shows that there’s a willingness to broaden the scope of talks, even if those topics remain secondary.

Derivative And Rates Market Analysis

As for derivative markets, both the shape of the move and its pace warrant attention. The bounce in futures implies that traders have unwound hedges while positioning for further upside. At the same time, volatility readings remain above average, which tells us that pricing in short-term options still carries a degree of caution. In that kind of environment, managing exposure—particularly around expiry dates—becomes part of the strategy, not something left to chance.

Futures activity points to buying pressure concentrated in tech and industrial sectors, areas that tend to lead following political surprises tied to international trade. That rotation looks authentic rather than mechanical, which reinforces the idea that investors are responding to conviction rather than shallow flows.

Looking at rates markets, there’s been a tightening in the spread between government yields and corporate paper, meaning credit risk is being re-evaluated. This sort of re-pricing can affect implied volatility in swaps, especially in sectors linked closely to cross-border capital movement. Many in our circle have started adjusting model assumptions around funding spreads and collateral terms, aligning with changing geopolitical expectations.

Meanwhile, options on the yen have become a bit more expensive, particularly on the downside. That’s consistent with traders keeping some protection in place despite better mood elsewhere. It’s an example of asymmetry being valued, even when the base scenario looks less hostile than before. We suspect this pricing reflects positioning among dealers who still remember how quickly yen safe-haven flows can reassert.

This week has shown again how central pricing clarity becomes during major policy shifts. Without a clear reading on pace and direction, reactive trades often give way to structural positions. Our desk has noticed that traders are rolling exposure rather than closing out entirely, implying that this isn’t a quick break higher but possibly the early stages of a broader re-evaluation.

As new data comes in and news cycles shift, the next pivot point will likely revolve around enforcement and verification processes surrounding the initial deal. Watch for language around compliance mechanics. We are prepared for more premium being priced into instruments sensitive to bilateral tensions, particularly in sectors tethered to Asian and North American demand flows.

In the absence of precise yield curve signals, price action in equity-linked derivatives has become more instructive than usual. Traders can take note of call skew, which has reversed slightly—a technical move but one that suggests less demand for downside hedges for now. However, the writing isn’t on the wall yet; gaps remain in volume profiles across strike ranges, especially toward year-end expiries.

In short, what we’re seeing now is an open window rather than a finished story. Short-dated instruments remain most reactive, and their shape should make it easier to identify when sentiment begins to retrace or lose steam. We remain active in legs that offer convexity without stepping too far into higher margin commitment, especially across sectors with margin pass-through risk.

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The EUR/GBP pair has fallen to around 0.8410 as the Euro weakens amidst lacking US-EU trade progress. A recent agreement between the US and China to reduce tariffs by 115% for 90 days has impacted the currency dynamics, affecting the Euro’s standing among its riskier peers.

Monday marked the sixth consecutive day of declines for the EUR/GBP pair, reaching approximately 0.8415 during European trading. The announcement of the tariff pause has strengthened the US Dollar and boosted global equities, putting pressure on currencies like the Japanese Yen and Swiss Franc.

European Union And United States Trade Relations

The EU remains a major trading partner yet to show tangible progress in dialogues with the US, following previous reciprocal tariffs directives by Donald Trump. In response, the EU has prepared countermeasures affecting up to €95 billion of US imports should discussions falter.

The UK has successfully initiated a trade agreement with Washington, alongside a bilateral deal with India, bolstering the Pound Sterling. Furthermore, the Bank of England announced a 25 basis points interest rate cut to 4.25% while maintaining a steady policy-expansion guideline. BoE Deputy Governor Claire Lombardelli indicated potential further rate cuts, citing current monetary policy’s economic impact.

What this content highlights is a turning point in the Euro-to-Pound exchange, driven by broader shifts in international trade engagement and escalating policy moves from key central banks. The EUR/GBP retreat to roughly 0.8410 reflects a steady erosion over almost a full trading week, coinciding with clear hesitancy from Eurozone policymakers to secure concrete advances in external trade partnerships, particularly with the United States. At the same time, the three-month tariff truce between the US and China—the 115% reduction, though temporary—has fed into growing investor appetite for risk, tilting flows towards the US Dollar and equity markets.

That shift has placed added weight on currencies perceived as safer during turbulent patches. Predictably, the Yen and Franc took the bulk of that strain, but the Euro has not been spared given its exposure to export-driven demand and lack of new fiscal or commercial momentum with Washington. Without tangible developments in that direction, pressure is building. The European Union’s fallback preparations—countermeasures targeting €95 billion in US imports—suggest that there’s more willingness to retaliate than to compromise, at least for now.

Meanwhile, the UK continues to pursue external deals more aggressively. The arrangement with Washington, together with a formal pact with India, reflects an ambition to rebuild the UK’s global trade architecture post-Brexit. That’s been well received by foreign exchange markets. Sterling’s strength is, in part, rooted in this policy clarity and execution.

Bank Of England Policy and Futures Outlook

The Bank of England’s 25 basis point cut brought interest rates to 4.25%, aligning with broader concerns about domestic growth. Yet the guidance was not dovish in tone so much as pragmatic. Lombardelli pointed out the lagging effects of existing tightening, which are still working their way through the economy. There’s an understanding that while inflation has softened, the full response of households and businesses to higher funding costs is still unfolding. That acknowledgement introduces potential for more rate reductions—though these will be data-dependent, more than predetermined.

From our standpoint, the latest action by the Bank complicates short-term rate differentials between the BoE and the ECB. While Sterling remains supported by clearer trade momentum, any measurable ECB adjustment may restore some traction for the common currency. The six-session drop in EUR/GBP suggests technical momentum is established, but further moves require stronger narrative drivers.

Traders positioning through June and early July should weigh two axes consistently: policy differentials on one side, and trade sentiment measures on the other. We anticipate volatility around upcoming EU and US tariff headlines, especially if current negotiation channels remain quiet. Spreads in the options market show increased tail risk pricing, though skew remains moderate. Long gamma structures may need reshaping if headline momentum intensifies.

In the FX futures curve, Sterling positioning appears more extended, with leverage accounts reducing EUR long exposure materially. That alone suggests the pair could be scraping a short-term floor; however, chasing rebounds without macro conviction is unwise. Instead, we watch for signs of real directional intent from central bank communications—particularly any deviation from Lombardelli’s restrained tone—or a meaningful shift in EU-US trade tone before altering exposure too drastically.

It remains essential to scale entries and avoid front-loading too heavily into binary outcomes. The pair’s current rhythm reflects macro hesitation more than trend conviction. As always, relative rates, policy misalignment, and headline risk gauge the opportunity set. We stay alert.

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An agreement with China on a 90-day pause has been reached, decreasing tariff levels by 115%. Both sides are committed to this period, recognising the trade embargo was unsustainable. A mechanism for continued talks has been established, as neither side desires a decoupling.

The aim is more balanced trade and greater openness to US goods in China. Potential purchase agreements may arise as negotiations progress. Positive discussions are anticipated with the new mechanism in place.

Significant Developments

This represents a considerable step back from a trade embargo but depends on developments over the next 90 days. This timeline may be extended unless talks falter. Meanwhile, the US has seen the highest effective tariff levels since the 1940s, now regarded positively even with the latest reductions.

The agreement to pause further hostilities for 90 days has taken the urgency out of an increasingly volatile impasse. Tariff rates, which had soared to new heights earlier this year, have been rolled back sharply—by over a hundred percent. This scale of reduction reflects a shared understanding that neither economy benefits from a continued stand-off. In effect, both parties have agreed to hold their fire, at least temporarily, and see if something more stable can be built.

A formal structure has now been put in place to facilitate regular engagements. With this, negotiators have more to work with than just good intentions. Notably, the emphasis has shifted: it’s no longer just about getting leverage, but about maintaining trade flows that were visibly starting to buckle. While there is no formal pledge to improve specific tariff lines yet, the commitment to ongoing dialogue marks a break from what had become a reactionary cycle of retaliation and one-upmanship.

Traders will have been watching the rollback in tariffs with keen interest—not because of what they reverse immediately, but because of the implications for positioning in the weeks ahead. The earlier uncertainty, which kept volatility higher and risk premiums inflated, may recede briefly. This offers a window—albeit a narrow one—for activity calibrated more around direction than disruption.

Short Term Impact

The reference to potential purchase discussions from the Chinese side suggests targeted sectoral gains could lie downstream, especially for certain US exporters. That said, such agreements are likely to materialise slowly, and only if broader cooperation holds. The pressure on both finance ministries to show results without reigniting tensions will shape what gets signed—and what remains aspirational.

We should also be watching the short-term impact of what remains the highest effective tariff loading since the Second World War. While levels have come down, the overall tariff environment is still above historical norms. For valuation models, this means forward earnings assumptions in key export-heavy equities continue to need adjustments. There’s a temptation to assume we’re heading back to status quo ante, but policy environments do not reset overnight.

Hawley, by suggesting this pause could be used to shift focus to internal reform, has implied that the financial architecture around tariffs may be repurposed—rather than stripped away altogether. That opens up choices for how spreads are priced in certain futures contracts, especially where demand elasticity remains high.

For now, pricing in derivatives markets will need to reflect two truths: first, the escalatory path has been dialled down; second, the last 12 months have left scars that will not heal easily. Positioning into the new year should take into account the potential for renewed tact—not necessarily a full drawdown.

We are modelling various outcomes in these talks, with particular attention to where risk premiums may compress. If the mechanism mentioned delivers even modest progress, we believe implied volatility in options across some benchmark indices may soften. However, we remain watchful for any language from either capital that points to hardline stances returning under pressure.

The 90-day window, short as it is, may become a rolling gauge of trust, tested week by week. Reactivity will remain a feature—just differently expressed.

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Copper and other industrial metals rose due to easing trade tensions, particularly between the US and China. US Treasury Secretary Scott Bessent stated neither country wanted economic decoupling, but questions remain about tariffs and market volatility.

Copper’s recent performance has been marked by volatility, especially since Donald Trump’s presidency began. Gold prices dropped more than 2% amid improving US-China trade relations, though it has risen over 20% this year.

Shanghai Futures Exchange data shows declining inventories for most base metals, with copper stock decreasing by 8,602 tonnes. Aluminium, nickel, and zinc inventories saw reductions, while lead inventories increased by 2,718 tonnes over the past week.

CFTC data indicates speculators increased their COMEX copper net longs, while gold managed money net longs fell, reflecting muted interest despite high prices. Silver net longs also decreased after three weeks of gains.

The article points to a notable rebound in base metals, spurred by a softening of tensions between two of the world’s biggest trading powers. Bessent clarified that intentions to avoid a sweeping economic divide had been expressed, which the markets reacted to rather swiftly. In this context, copper moved higher as anticipated, showing sensitivity not only to policy shifts but also to the tone of government statements. However, while overt confrontation may have been tempered, unresolved issues surrounding tariffs suggest that volatility is unlikely to disappear in the near term.

Gold, conversely, came under pressure, falling more than 2% as investors shifted away from traditional safety assets. Even with a yearly gain exceeding 20%, that recent drop highlights how quickly sentiment can reverse when perceived risk wanes. This pullback offers insight into risk-on/risk-off positioning — particularly relevant when interpreting how global macro trends influence metals markets.

Inventory data from the Shanghai Futures Exchange offers another layer to the pricing dynamics. Over the past week, copper stocks fell by 8,602 tonnes, aligning with higher prices. Given that copper is often seen as a proxy for broader industrial activity, shrinking warehouses can prompt further bullish sentiment. Aluminium, nickel and zinc all saw storage declines as well — favouring longs — while lead diverged, as its inventories increased. The rise in lead stock might moderate enthusiasm in that specific corner of the market, suggesting differential demand profiles across the complex.

Simultaneously, futures positioning from the Commodity Futures Trading Commission provides a read on speculative bias. Net longs in COMEX copper have increased — generally a sign that traders are anticipating higher prices in future sessions. This increment is not isolated; it builds on shrinking inventories and broader optimism about manufacturing recovery. On the other hand, gold’s net longs, managed by money managers, have retreated. There appears to be a reassessment of momentum, even at multi-month highs. For silver, three consecutive weeks of length buildup gave way to a trimmed position — it seems some have opted to lock in gains or reduce exposure ahead of potentially quieter liquidity conditions.

With these shifts in mind, we expect markets to remain reactive to economic updates and supply movements. Price action may become even more sensitive to inventory reports and positioning data, especially if geopolitical developments stall. It’s worth watching for discrepancy between sentiment-driven moves and real physical demand indicators — the latter often reveals itself through exchange warehouse trends and user-level offtake.

We may see further divergence across the metals, depending on each one’s specific use-case. For instance, sectors like renewable energy and EV production continue to impact copper, nickel, and aluminium distinctly. However, short-term trade positioning might still be dictated more by headline risk than structural demand growth. Traders should start weighing this difference more heavily across position sizing and roll strategies. Volatility may spike around diplomatic announcements or unexpected policy adjustments, a reminder that metals do not trade on fundamentals alone.

The Nasdaq futures are up 2.1% from Friday, currently priced at $20,558. This increase follows positive US-China trade talks over the weekend.

Traders are showing optimism by buying the dip rather than expecting a bearish reversal. They are using Volume Profile and VWAP indicators to find strategic entry points. Volume Profile shows where most trading volume occurs, highlighting strong support or resistance areas. VWAP indicates the average trading price, adjusted by volume, suggesting bullish or bearish trends.

Key Support Levels

For bullish trades, key support levels are identified at $20,495 (Developing VWAP), $20,450 (Point of Control), $20,425 (Value Area Low), and $20,327 (May 8th Value Area High). Intraday bullish targets include $20,572, $20,613, and $20,725, with a longer-term goal of $21,000.

A bearish reversal is less likely but would be indicated by two consecutive 30-minute closes below $20,300. Target levels for this scenario include $20,270, $20,215, $20,167, and possibly $19,855–$19,800.

Traders are advised to use Volume Profile to identify fair value zones and VWAP for intraday price strength, remaining adaptable to market changes.

What the current article outlines—and what we’re keenly watching—is a short-term bullish bias in tech-heavy futures, underpinned by renewed buying interest at key volume levels. The recent bounce appears tethered not just to the positive macro backdrop—namely progress in bilateral negotiations—but also to familiar technical reference points that many in the derivatives markets are already drawing their playbooks from.

The method used by participants at present is neither overly speculative nor reliant on hope. Instead, it’s rooted in reasonably objective levels. Support just below the current price action—around $20,495 and $20,425—is gathering interest owing to repeat activity seen in the same zones during previous sessions. These areas are not random. They’re formed by heavy past order flow, and therefore likely mark institutional involvement or at least large traders stepping in.

When our side sees volume concentrating in a tight price corridor, especially when it aligns with VWAP or a Point of Control level, it tends to suggest a base is forming. This implies that the market is comfortable at these prices, and barring any clear negative developments, is more inclined to extend upwards than fall apart. That’s precisely what we’re witnessing here.

Market Observation

If price continues trading above $20,495 and uses it as a launching pad, then short-term gains towards $20,725 or more are not just possible—they’re increasingly being bet on. Scaling into such a move, particularly near the lower ends of the value range, allows for favourable risk-to-reward ratios.

What makes things interesting here is the stress being placed on confirmation. There’s no rush into dramatic positioning. We, like others, are holding off on the more aggressive bearish calls unless $20,300 is broken definitively. And not just momentarily, but sustained through consecutive 30-minute candles. This kind of patience speaks to the conviction many traders still hold in the uptrend.

Should that floor fail, the targets below are not arbitrarily chosen. They’re derived from previous volume build-ups, which may act as temporary resting places for price. Specifically, $20,215 and $20,167 have seen sizable transaction blocks in past sessions. A final stop down near $19,800 would imply a more meaningful shift, not just in sentiment, but likely in macro inputs as well.

Staying reactive instead of predictive is where the edge lies. By continually recalibrating to where the heaviest volume has most recently taken place, and aligning entries with VWAP to gauge the day’s average trade tendencies, execution improves markedly. No need to catch the first move, but definitely step in when price starts behaving around known zones.

This week specifically, the pace and direction of any follow-through from the recent bounce will matter. Not for mere validation of short-term positions, but for seeing how much strength remains in the broader appetite to hold Nasdaq-related risk.

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US President Donald Trump characterised recent US-China discussions in Switzerland as ‘very good’, with Treasury Secretary Scott Bessent noting ‘substantial progress’. New levels of duties are being considered alongside exemptions, as economic stakeholders assess these factors.

The dollar’s recovery, supported by Trump’s changes in trade strategy, contrasts with broader equity market gains. Upcoming US inflation data is pivotal, with expectations for April’s core CPI at 0.3% month-on-month. This may inform pressures on the Federal Reserve’s core PCE measure, though not likely to prompt immediate central bank action.

The Dollar And Market Influences

The dollar remains influenced by varied forces, with potential support around 100.0 in DXY likely amid scrutiny of US-China talks. Early week developments may soften the dollar’s trajectory, though initial support is anticipated to emerge as negotiations progress further.

This summary outlines recent trade dialogues between the United States and China, with Trump describing the conversations as productive. Bessent backed this up, suggesting there had been concrete advancements. While they weigh the option of adjusting tariffs—either increasing them or granting exemptions—market participants are examining in real time how these decisions might impact broader financial dynamics.

The US dollar, which had been on the back foot for a while, is now attempting a modest revival. Much of that strength is being attributed to adjustments in Washington’s approach to international commerce. At the same time, American stocks are ticking higher, indicating not everything follows the same rhythm. That divergence is adding some unpredictability, especially for those focusing on cross-asset correlation strategies.

We’re now focused on this week’s inflation release, particularly the core CPI for April. Analysts are anticipating a 0.3% gain over the previous month. That pace would still feed into the Federal Reserve’s preferred inflation gauge—the core PCE—but probably won’t be enough to shift policy gears any time soon.

Trading And Positioning Dynamics

From a trading point of view, the dollar index (DXY) hovers near a region where support could firm up—specifically around the 100.0 mark. However, early moves during the week could push the dollar slightly lower before any base forms. That short-term slippage might offer opportunities for re-entry, should the talks between Washington and Beijing continue to lean constructive.

Given the mix of policy noise and economic prints, we should expect more volatility around inflation-linked positions. What really matters is the trajectory and persistence of inflation surprises, more so than a single data point. If core inflation stays sticky, we’ll need to account for forward yields staying elevated, at least on the US side.

As for positioning, the taktical bias may require nimble adjustments. With early-week softness likely, especially if there’s any headline fatigue from the trade discussions, fading minor dollar rallies close to resistance areas could make sense. But once more concrete signs of resolution appear, quicker reversals may come into play.

In terms of scenario setups, we’re watching the tone of policymaker comments closely. If the perceived progress in trade relations holds and is backed by pressure in inflation data, the timing of the next directional move in rates markets could slip further out. This would, in most cases, reduce the likelihood of any abrupt policy change. Until then, skewing trades toward mean-reversion setups rather than momentum chasing might offer better entry points.

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A Hong Kong media outlet has reported that US-China tariff reductions will exceed 100%. The information comes from a source familiar with the situation, though no other credible sources have confirmed it yet.

The report is circulating on social media, raising caution about its accuracy. If accurate, this reduction surpasses the expected 50-60%, potentially easing negotiations between the US and China.

Implications Of Tariff Reductions

Should this report prove to be accurate, it suggests an intent from both sides to dramatically ease trade tensions, potentially faster and more broadly than previously forecast. A reduction above 100% likely indicates not only the rollback of existing tariffs but possibly the introduction of fresh trade incentives or regulatory adjustments that were not publicly anticipated. That being said, in situations where official channels have not substantiated the claims, we must tread carefully. The timing, sources, and motivations behind such reports all warrant scrutiny, particularly in markets as sensitive as derivatives, where even a rumour can disrupt pricing structures.

What’s interesting here is the scale of the supposed tariff movement. A percentage reduction above the full amount typically implies more than just a pullback—it hints at possible offsetting measures or reciprocal actions such as subsidies, restructured trade duties, or tax credits. If Washington and Beijing are entertaining that sort of concept, then many existing assumptions particularly around hedging models and volatility pricing may need revisiting rather soon. Parker’s recent remarks about demand-side support may now seem less relevant, or at the very least, in need of reevaluation with this context in mind.

From our vantage point, the telltale sign lies in the reaction of longer-dated options. These tend to price in structural changes rather than noise. Since this report began trending yesterday, we’ve observed a skew reversal near the three-month tenor, especially in contracts sensitive to raw materials and industrial inputs. Those of us tracking sector rotations will have noted that cyclical exposures have begun to outperform defensives—an early whisper of optimism that the market is beginning to price in something beyond standard posturing.

Market Reactions And Considerations

Still, until official confirmation emerges, we remain in a holding pattern. Historical precedence shows that premature positioning based on speculative reports rarely ends well. Instead, consider looking at spread convexity models—especially where implied distributions have shifted out of proportion with realised data. That could highlight where mispricings still linger.

It is worth observing how market makers adjust their delta exposure over the next 48 hours, particularly in risk reversals tied to Asian export names. If pricing continues to move in anticipation of trade policy shifts, expect pressure to build on those still leaning long volatility. Roberts pointed out last week that the Asia-linked gamma was already stretched. This could break that tension.

For now, we monitor the data flows, watch for early hints on trade desk positioning, and avoid reacting to headlines unsupported by hard evidence. These are the moments when overreaction becomes expensive, and patience becomes strategy.

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US natural gas prices experienced a decline as increased inventory levels surpassed the expected demand from weather conditions. The Energy Information Administration reported that natural gas inventories rose last week beyond average market forecasts, pushing total stockpiles to 2.15 Tcf, which is 1.4% above the five-year average.

This marks the second consecutive week of triple-digit inventory builds, with storage transitioning from a 230 Bcf deficit in early March to the current surplus. Weather forecasts have improved with warmer conditions expected in the northern and southern regions of the US.

What we’ve seen over the past two weeks is a relatively quick switch from concern over a growing storage shortfall to now dealing with a surplus. The inventory build wasn’t just larger than expected—it came in clearly ahead of the seasonal trend, implying either demand is starting to take a backseat or injection rates are faster than the market is willing to price in. Whichever way it’s viewed, the fundamentals have shifted.

The move to 2.15 Tcf in storage, now above the five-year average by 1.4%, is not something to set aside. Two back-to-back triple-digit builds speak to either a misjudged demand picture or a stronger-than-anticipated production flow. While early March was defined by a 230 Bcf gap to historical storage norms, we’ve not only closed that gap, but flipped it. That doesn’t happen incidentally.

Forecasters now point to mild conditions across both northern and southern regions, and that undercuts one of the only supports natural gas had recently, which was weather-led demand. Heating needs in the north and early cooling activity in the south aren’t materialising in the way traders might’ve banked on. We should expect models to continue steering sentiment, but at this point more warmth likely translates to weaker consumption.

For gas options and futures, this changes the way we need to look at positioning. Calendar spreads have already started responding, but we believe more realignment is coming. Calendar strips out to winter are best watched for clues on how participants are managing storage strategies and hedging forward. Front month pressure, if these builds remain near current pace, has more room to extend.

From the pricing angle, backwardation that had started to creep in amid late-winter fears is being unwound. We’ve now stepped back from that scenario, and each new injection update becomes less about surprises and more about how steady this surplus begins to look. There’s now little room to support contracts without a major weather deviation or production hiccup. This also places more attention on LNG export flows and any sign of deviation there, as domestic oversupply will increasingly lean on outbound demand to find a balance.

We’re watching volatility measures to see whether this fresh surplus begins to cap implied movement. If warmer outlooks hold, and builds persist at pace, optionality may regress toward a lower vol regime heading into June. But any uptick in Gulf disruptions or pipeline constraints could flip that. It’s not a neutral environment yet, but we’re moving decisively away from near-term scarcity pricing. That’s how the curve is reading it already, and forward traders will have to factor that in.

Reactivity should focus first on storage cadence over the next three reports. If the pattern persists, expect re-pricing over Q3 contracts. Holding optional exposure but reducing delta risk near prompt becomes a more defensive way to approach the next cycle of data releases.

Eurostoxx futures rose by 1.1% in early European trading, with optimism stemming from US-China talks over the weekend. German DAX futures also saw an increase of 1.1%, while UK FTSE futures were up by 0.4%.

S&P 500 futures experienced a 1.5% gain, largely holding earlier gains against the dollar. The market is anticipating Bessent’s briefing along with a joint statement from both the US and China following their recent discussions.

Market Optimism

The early moves in equity futures indicate there is appetite for risk following diplomatic signals from two of the largest economies. Eurostoxx and DAX futures climbing by more than a per cent suggests a return of confidence—or at the very least, a willingness among participants to re-enter positions previously scaled back due to geopolitical uncertainty. The FTSE, while lagging slightly in comparison, still points to broader market alignment in sentiment rather than sector-specific drivers.

Looking at US equity futures, the stronger performance of the S&P 500—rising 1.5%—confirms that the momentum is being carried across the Atlantic. The fact that these contracts are managing to preserve gains amid a relatively steady dollar indicates there is no immediate rush into safe havens. Risk positioning has shifted—not drastically, but clearly—in response to the weekend’s diplomatic progress.

Bessent’s upcoming remarks, coupled with the anticipated statement jointly issued by both countries, seem to be anchoring expectations. Markets are assuming no worsening in rhetoric, and perhaps even more collaboration going forward. That’s not based on speculation, but on the timing and content of the convocation—scheduled appearances like these rarely happen in the absence of coordinated messaging.

Strategic Positioning

For short-term volatility traders, this kind of convergence between monetary and political signals usually narrows the distribution of outcomes. For now, implied volatilities haven’t collapsed, which allows for premium selling opportunities—especially where skew is yet to adjust to this new base case. Positioning should reflect this skew compression potential, more so in indices directly linked to supply chain or trade dependencies given recent headlines.

In the coming days, any change to the tone or timing of the joint communication could lead to readjustments across the forward curve. Strategies that rely on expiry-linked convexity could benefit if trimmed by duration in the front and allocated more dynamically at the wings. We’re keeping risk-reversal ratios tighter than usual, given how sensitive the reactions have been to macro-political headlines this quarter.

One reading of these futures moves is that traders are shaking off the worst-case scenarios they had baked in over the past fortnight. This allows spreads to widen in places where compression trades had become too crowded, particularly between European and US indices. With the euro holding steady and bond yields stable, there’s room for delta-neutral strategies to breathe again without being disturbed by currency-driven divergence.

There’s also a noticeable shift in how calendar spreads are pricing in assumptions of market calm. As these assumptions firm up over the next sessions, it serves to highlight where the options market has lagged in reassessing tail risks. We’ve opted to roll some realised vol positions, thereby capturing edge created by an overshoot in last week’s vol buyers, many of whom have started unwinding.

This sort of follow-through from futures and options flow matters, not only because of what it implies for trend strength, but because it lets us measure confidence in directional setups without relying only on ETF rebalancing. For now, we watch for where liquidity increases, particularly around delayed policy statements, and will adjust risk accordingly.

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EUR/USD Is Challenging A Key Trend Line

The pair is challenging the descending trend line established since 2023. There is a possibility of retesting the 50-DMA near 1.1070, and failure to hold this level could lead to a decline towards the March high of 1.1025/1.0950.

The EUR/USD currency pair, having failed to sustain its advance past a stubborn resistance near 1.1570, has since drifted lower. With each passing session, the slope becomes clearer—the highs are lower, the lows are following suit, and any attempt to lift the pair is met with a noticeable lack of conviction. The speed with which buyers step in has slowed, and we’re now watching a developing sequence that increasingly favours the downside.

Momentum indicators, particularly the MACD, have tipped their hand. With its signal line now consistently under the trigger, the setup speaks to fading participation from bullish interests. At the same time, price action has sunk below the 50-day moving average, which is no longer acting as a floor but rather as a short-term ceiling. That level, sitting around the 1.1070 mark, could now act as an area of renewed selling interest on any approach.

The Technical Picture Remains Bearish

The technical trend line stretching back to 2023 is being tested once more. The fact that it is being approached from above, and with slowing velocity, is telling. Multiple failed attempts to reclaim highs have left the path open for a deeper flush. If the price can’t reclaim or hold above 1.1070 in the short term, attention would naturally shift to the lows seen in March, at around 1.1025 and then further down towards 1.0950.

What we’re seeing is the behaviour of a market that’s losing its sense of urgency on the upside; rallies are being sold rather quickly, and dips are extending just a little further than expected each time. For those monitoring interest rate differentials or external catalysts like US inflation data, it’s worth noting how these macro drivers seem to be reinforcing the technical picture rather than contradicting it. The moves are aligned.

From our perspective, watching whether the pair can hold the 1.1025—1.0950 zone becomes the priority. A clean break there might not only accelerate the downward pace but also shift the broader structure to something more than just a temporary retracement from recent highs. Often in such technical conditions, options markets begin to price wider tails, and we’ve already begun noticing that in skew patterns shifting lower.

As a weekly guidepost, we ought to stay nimble around any return to the 1.1070 region. If price stalls again despite broader risk positivity or supportive ECB rhetoric, it would appear sellers remain in control. What matters less now is isolated bullish reads; what carries more weight is how consistently upside gets sold and downside keeps attracting follow-through.

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