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Daily Pivots: (S1) 0.9141; (P) 0.9155; (R1) 0.9165; More....

Intraday bias in EURCHF stays on the upside at this point. Rebound from 0.8979 short term bottom should target 61.8% retracement of 0.9394 to 0.8979 at 0.9235 next. On the downside, below 0.9090 minor support will turn intraday bias neutral again first.

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress. Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of rebound.

Markets

The ECB Watchers Conference distracted from the ongoing war in the Middle East yesterday. Key takeaways include that, while the 2026 macroeconomic backdrop is different from 2022, the ECB is on high alert for energy inflation to spill over and affect inflation expectations through wage price setting. The latter is likely to adjust much quicker because of the 2022 legacy. Any shock that is not short-lived and limited in size would require a monetary policy response, if only for the sake of communication and to underscore the central bank’s resolve to keep inflation at 2%. The market impact was limited and in any case distorted by reports of a 15-point US plan offered to Iran to end the war. A one-month ceasefire was included to allow for negotiations. After weeks of bombardments and aggressive rhetoric, the diplomatic outreach prompted some risk on in markets. Stocks rose, Brent oil lost the triple digit mark at some point and core bonds sighed of relief. European and UK bonds outperformed Treasuries. German rates eased between 6 and 7.1 bps in bull steepening. Gilt yields tanked 5.6 (2-yr) -13.3 (30-yr) bps. US net daily changes went from -0.4 to -3 bps. That slight yield advantage kept the USD favored over peers, be it in technical irrelevant trading. EUR/USD dropped below 1.16. DXY rose from the low 99s towards 99.6. USD/JPY is closing in on the loaded, FX-intervention prone 160 barrier.

Yesterday’s optimistic market view was striking given that it completely looked through Iranian rejection of the proposal. The Middle East country replied with five conditions that need fulfilment before agreeing to any end of the war. International recognition of Iran’s sovereignty over the Strait of Hormuz is a particular thorny one. Meanwhile the US is building up presence in the region, fanning speculation for boots on the ground and a possibly protracted war that spans far beyond the 4-6 week timeframe currently put forward by the US. The conflicting signals inject renewed doubt in the market today, dragging Asian bourses and Treasuries again lower. Brent oil rises 3% to $104/b. The dollar steadies around yesterday’s closing levels. A relatively empty eco calendar keeps the spotlights on the war. That means trading continues to be headline-based and inherently unpredictable. Several Bank of England policymakers hit the wires today. Two of them are among those having dropped their previous call for rate cuts earlier this month.

News & Views

A survey by the British Retail Consortium shows that consumer confidence in the UK collapsed as the Middle East conflict raised the prospect of higher inflation in the months ahead. As stock markets tumbled, both the index of confidence in the economy over the next three months (-56 from -30) as well as consumers’ expectations on their own personal finances (-17 from -6) dropped to their lowest levels on record. BRC analyses that the drop in confidence was most pronounced among the boomer generation who are most reliant on investment and pension funds. Spending expectations rose but BRC analyses, but this was due to the fact that consumers expect to see rising energy costs being reflected across the economy. Data supporting the survey were collected between March 10-13.

RBA assistant governor Kent offered an in depth view on Australian financial conditions and the meaning/reference of the neutral policy rate when setting monetary policy. On the current developments, Kent assessed that heightened geopolitical and economic uncertainty globally have led to some tightening in financial conditions which all else equal implies a decline in short-term neutral rates. However, the supply shock also poses a risk to inflation and longer term inflation expectations at a time when there are ongoing capacity pressures in Australia and several other advanced economies. This could both push short-run neutral rates higher and necessitate a more restrictive stance of policy. ‘A negative supply shock pushes up prices and leads to weaker economic activity, making us all poorer. Central banks cannot change that. But they can ensure that the initial rise in prices does not lead to a rise in longer term inflationary expectations and extended inflationary pressures’ Kent analyses. At the same time, he indicated that it is not the RBA’s intention to force the economy in a recession. It wants to shield the labour market as long as inflation is on a credible path down. The Austrian 3-y yield nevertheless rose 10 bps this morning (4.72%). Markets raised the prospect of a 25 bps next hike at the May meeting from about 65% to 82%. After a correction this week, AUD/USD holds near 0.695.

The US sent a 15-point plan to Iran to end the war, which Iran publicly refused. They proposed alternative conditions instead and continued attacks in the region.

Interestingly, equity investors bought into the US 15-point peace plan and hardly reacted to Iran’s rejection. The S&P 500 rose 0.54% yesterday. Despite trade and geopolitical uncertainties, analyst estimates for S&P500 earnings may have improved since the start of the war, according to Bloomberg Intelligence. Expectations for profit growth rose from 10.9% to 11.9% since the beginning of Middle East hostilities, narrowing the margin for disappointment and increasing the risk of a sharper correction.

The index met resistance at the 200-DMA, while US crude jumped 4%.

Oil is higher again this morning, with Brent crude preparing to regain the $100pb handle. Asian equities are down, while US and European futures point to a lower open. Investors are trying to price out the war and price in a peace rally ahead of time. But risks remain elevated and downside risks prevail.

Donald Trump insists that peace negotiations are ongoing, describing developments in the Middle East as “big”, but he is no longer controlling the narrative. One of Iran’s senior military figures mocked the US, saying: “Has the level of your inner struggle reached the stage of you negotiating with yourself?” This reflects where we stand in negotiations.

That said, Trump appears eager to end the war as political and geopolitical pressure builds into the midterm elections. Deutsche Bank has even created a “pressure index” incorporating factors such as the one-month change in Trump’s approval ratings, stock market performance, and inflation expectations derived from bond markets. That index is now at its highest level since his election.

And the economic pressure is spreading beyond oil prices. US mortgage rates, for example, have returned to their highest levels since October, weighing on new purchase applications. These rates are driven by the US 10-year yield and a risk premium—both of which have risen since the start of hostilities, alongside oil prices, inflation expectations and US debt concerns. The US 10-year yield has risen by as much as 50bp from its early-month lows, as investors shifted from pricing in summer rate cuts to considering the possibility of rate hikes later this year and more military spending in the coming years. Fed funds futures currently imply around a 30% chance of at least a 25bp hike by year-end. But note that this could change rapidly as stagflation risks also rise.

In FX, the US dollar appreciated yesterday and remains slightly bid in Asia. The EURUSD and Cable are both under pressure despite increasingly hawkish expectations for the European Central Bank (ECB) and the Bank of England (BoE). In Europe, ECB President Christine Lagarde said the bank “will not be paralysed by hesitation” in responding to the energy shock from the Middle East war. In the UK, hotter-than-expected inflation data—partly reflecting earlier declines in energy prices—suggest that the energy shock could materially shift the inflation trajectory and force a policy response.

In Westminster, Rachel Reeves indicated plans to accelerate power plant construction, aiming for projects to come online by the end of 2027... a bit ambitious!

Global X Uranium ETF rose 1.58% yesterday but has declined since the start of the war, despite European pledges to return to nuclear energy. The medium- to long-term outlook remains positive, and current levels could attract buyers back into the market.

Elsewhere, gold reversed the past two sessions’ gains in Asia this morning, falling more than 1.5% as optimism around a Middle East peace fades. Other metals, including silver and copper, are also under pressure from a stronger US dollar, higher yields and deteriorating global growth expectations, as the war risks extending beyond a month.

Commodities and TIPS remain effective hedges in an inflationary environment, but uncertainty is currently so high that cash is king—and in practice, that often means the US dollar.

Once the dust settles, however, the hawkish divergence between European and other major central banks relative to the Fed could cap further dollar appreciation. The US dollar and Treasuries have been losing their international appeal due to erratic trade policies, rising US debt and US’ deteriorating international relations, which are pushing central banks to diversify reserves away from US assets. That longer-term trend is likely to reassert itself. For now, however, the dollar benefits from a lack of credible alternatives. Today’s US 30-year bond auction will be worth watching.

In tech, news flow was mixed. Meta and Google were found liable for harming young users of their platforms and will face fines. However, their share prices were largely unchanged, as the penalties are marginal relative to revenues and investors remain focused on AI, growth opportunities rather than regulatory risks. The primary valuation risk remains delayed returns on heavy AI investment.

That said, AI demand remains strong. Arm Holdings jumped more than 16% after announcing plans to start building its own chips, with potential annual revenue of up to $15bn by 2031. The company has historically focused on chip design for third parties. That said, Arm remains expensive, trading at around 190 times earnings. While new revenue streams may compress that multiple, the stock is unlikely to become cheap anytime soon.

In focus today

In Norway, we expect Norges Bank (NB) to keep the policy rate unchanged at 4% at today's meeting, in line with market expectations. Due to the great uncertainty and fluctuations in financial factors related to the situation in the Middle East, we expect NB to signal an unchanged policy rate until there is more information about the development in energy prices and the consequences for inflation. We expect NB to emphasize that they are ready to hike the policy rate if inflation remains high or rises. We expect the rate path in the Monetary Policy Report to show an unchanged policy rate for the rest of the year, followed by a cautious decline in the coming years. The risk is on the upside, as the rate path could indicate a certain probability of a rate hike later this year, driven by an increase in global rate expectations.

In Sweden, trade balance and household lending data for February will be released.

In the European Parliament, MEPs will vote on advancing the EU-US Turnberry trade deal amid uncertainty surrounding tariffs. The deal includes safeguards such as ensuring the pact takes effect only when the US commits to the agreed 15% tariff ceiling and a solution for steel and aluminium. If cleared in parliament, it moves to member state negotiations.

Economic and market news

What happened yesterday

In Sweden, the Riksbank Minutes revealed a board slightly divided on how to deal with supply shocks. Seim and Thedéen are open to frontloaded rate hikes, whereas Jansson, Bunge, and the newest member, Hjelm promote a gradual, wait-and-see approach. Hjelm prefers to see through the supply shocks, even in an adverse scenario. Like Jansson, Hjelm warns against overreacting, emphasising the risks of a policy U-turn. Our conclusion is that the Riksbank will show high readiness to act in May if the conflict persists and continues to impact intermediate goods. The money market shaved off 5-6 basis points from the 2026 curve. Read more in Riksbank Minutes - March 2026, 25 March.

The NIER survey was a mixed picture, with the overall ETI index remaining basically flat, manufacturing showing some improvement, and consumer confidence deteriorating. Retail price plans were largely unchanged.

In Germany, the Ifo index for March showed the same picture as the ZEW index with expectations falling significantly but the current situation holding up. Expectations declined to 86.0 as expected from 90.2 while the assessment of the current situation remained at 86.7 which was better than expected. The war in Iran is thus yet to affect growth in Germany, but it is clearly expected to have a negative effect in the coming months. However, the decline in expectations is significantly lower than what happened at the onset of the war in Ukraine in 2022.

In the UK, February inflation data figures aligned closely with expectations, with headline at 3.0% y/y, core at 3.2% y/y, and services at 4.3% y/y. This confirms that the disinflationary trend remains largely intact. However, data is quite outdated, as investors are now leaning towards a rate hike from the Bank of England in April.

Oil prices climbed above USD 100/bbl amid once again conflicting headlines from the Middle East. Iran dismissed the US-proposed ceasefire plan as 'excessive' and set forth demands, including authority over the Strait of Hormuz and war compensation. Strikes continued across the Gulf region this morning.

Equities: Equities continued higher yesterday, Stoxx 600 up 1.4% and S&P 500 up 0.5%. This was a geopolitical reversal trade, with cyclicals outperforming defensives, yet a selective one, as investors are at best cautiously optimistic. Materials, health care, consumer discretionary and industrials up 1-2%. Oil prices have edged somewhat higher again over night and as a result, Asian markets are down 1-2% this morning. US and European equity futures are -0.5% lower this morning.

Interesting dynamics in the tech space yesterday. Big tech mostly higher, along with semis and memory companies, while the software space was weaker again. Trigger for the move was Broadcom out yesterday saying that is experiencing significant supply chain constraints due to surging AI chip demand straining production capacity. These pressures are now spilling over beyond semiconductors into PCBs and other components, with capacity limitations pushing lead times from approximately six weeks out to six months. If a company of Broadcom's scale is running into these constraints the situation further down the value chain is likely to look even more challenging. Similarly, CPU giants Intel and AMD notified customers of price increases. The backdrop is the same story, with worsening supply constraints pushing delivery lead times from 1-2 weeks to 12 weeks or longer. This is a theme to monitor closely ahead of the upcoming Q1 earnings season, as a shortage of components could impact many sectors.

FI and FX: Yesterday was relatively quiet in FX and FI markets. Brent crude traded around the USD100/bbl level, NOK and SEK rebounded slightly and yields fell as the market was relieved of a day with no major news shocks from the Middle East. EUR/USD continued to trade around the 1.16 level.

Daily Pivots: (S1) 1.1532; (P) 1.1582; (R1) 1.1608; More….

EUR/USD is still extending consolidations above 1.1408 and intraday bias stays neutral. With 1.1666 cluster resistance (38.2% retracement of 1.2081 to 1.1408 at 1.1665) intact, further decline is in favor. On the downside, below 1.1408 will resume the fall from 1.2081 to 38.2% retracement of 1.0176 to 1.2081 at 1.1353. However, decisive break of 1.1666 will argue that the fall from 1.2081 has completed, and turn bias back to the upside for 61.8% retracement of 1.2081 to 1.1408 at 1.1824.

In the bigger picture, prior break of 55 W EMA (now at 1.1501) should confirm rejection by 1.2 key cluster resistance level. The whole up trend from 0.9534 (2022 low) might have completed as a three wave corrective rise too. Deeper fall is expected to long term channel support (now at 1.0528). Meanwhile, risk will stay on the downside as long as 1.2081 holds, even in case of strong rebound.

Daily Pivots: (S1) 158.80; (P) 159.15; (R1) 159.82; More...

USDJPY is still extending consolidations below 159.88 and intraday bias remains neutral. In case of another dip, downside should be contained by 38.2% retracement of 152.25 to 159.88 at 156.96 to bring rebound. On the upside, break of 159.88 will target a test on 161.94 high.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 152.70) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

Daily Pivots: (S1) 1.3336; (P) 1.3386; (R1) 1.3415; More...

GBP/USD is still bounded in range trading and intraday bias stays neutral. With 1.3482 resistance intact, further decline is in favor. On the downside, below 1.3216 will resume the fall from 1.3867 to 1.3008 structural support. However, decisive break of 1.3482 will argue that the fall from 1.3867 has completed, and turn bias back to the upside for 61.8% retracement of 1.3867 to 1.3216 at 1.3618.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place at 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least correcting the rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or until further development.

Daily Pivots: (S1) 0.7882; (P) 0.7904; (R1) 0.7939; More….

Intraday bias in USD/CHF remains neutral for the moment, as consolidations continue below 0.7957. As noted before, rise from 0.7603 should be correcting whole decline from 0.9200. Above 0.7957 will target 38.2% retracement of 0.9200 to 0.7603 at 0.8213. This will remain the favored case as long as 0.7746 support holds.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8085) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Daily Pivots: (S1) 1.3766; (P) 1.3794; (R1) 1.3838; More...

USD/CAD's rally from 1.3480 continues today and intraday bias stays on the upside. The rebound is seen as correcting the whole down trend from 1.4791 and should target 1.3927 resistance, or probably further to 38.2% retracement of 1.4791 to 1.3480 at 3981. On the downside, below 1.3771 minor support will turn intraday bias neutral first.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen, as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. However, break of 1.3927 resistance will argue that the correction has completed with three waves down to 1.3480 already.

Daily Pivots: (S1) 0.6925; (P) 0.6965; (R1) 0.6987; More...

AUD/USD continues to press 0.6943 key support but there is no clean break yet. Intraday bias remains neutral first. On the downside, decisive break of 0.6943 should confirm rejection by 0.7206 key fibonacci resistance. That would set up deeper correction to the whole up trend from 0.5913, and target 38.2% retracement of 0.5913 to 0.7187 at 0.6700. Nevertheless, break of 0.7061 minor resistance will retain near term bullishness, and bring retest of 0.7187 high first.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Decisive break of 61.8% retracement of 0.8006 to 0.5913 at 0.7206 will pave the way back to 0.8006. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.