BofA Securities Closes Long EUR/USD Position

Economic

Forex

Summary:

Bank of America Securities remains bearish on the U.S. dollar, but has closed its long EUR/USD position, citing...

Bank of America Securities remains bearish on the U.S. dollar, but has closed its long EUR/USD position, citing near-term geopolitical risks.

The bank entered the trade on April 10, with a spot reference of $1.1061 and an initial target of $1.15, which it revised up to $1.19 on April 22.

At 07:05 ET (11:05 GMT), EUR/USD traded 0.2% higher at $1.1524.

Bank of America Securities remains bearish on the dollar, continuing to forecast EUR/USD at $1.17 by the year-end, on a mix of negative USD and positive EUR developments, but geopolitical tensions pose near-term risks.

With this in mind, the bank has decided to close its long EUR/USD recommendation on the back of elevated geopolitical risks in the Middle East and reassess at a later stage.

“We certainly continue to see space for the USD to sell off further, including vs the euro,” analysts at the bank said, in a note dated June 19. “But with the USD sentiment at bearish extremes and the market clearly long EUR/USD, we cannot take the European Real Money EUR dip-buying bias for granted should Middle East tensions escalate further.”

The bank also noted that the latter stages of a euro rally are often choppier, especially in comparison to the first two thirds that tend to be fast and furious - 2023 serves as a good example of this.

“If this is again the case, the euro may be at a point where it corrects this summer back to $1.1200/ $1.1065 and makes a modestly higher low than May (which was $1.1065),” BofA added.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Glendon

Economic

Cryptocurrency

According to data from Santiment, mentions of Powell and the FOMC spiked to their third-highest level in 2025, underlining the heightened attention the issue has drawn among traders and analysts.

At present, Bitcoin trades 6.8% below its May 22 all-time high, while the S&P 500 sits 2.6% under its February 19 peak.

The market reaction suggests that investors are watching the standoff between the Trump administration and the Fed closely, anticipating whether political pressure might translate into accommodative monetary policy.

Trump is expected to maintain pressure on Powell to cut rates in order to stimulate market sentiment and economic growth. However, Powell may resist such political influence and continue advocating a more cautious, data-driven policy based on inflation metrics and broader economic indicators.

For crypto markets, especially Bitcoin, the debate holds key implications. Historically, rate cuts have served as bullish catalysts for digital assets and equities alike. While the Fed’s current stance has paused immediate upside momentum, a reversal could fuel a strong crypto rebound.

With social media already pricing in the possibility of upcoming cuts, the trajectory of crypto assets may soon hinge on whether Powell bends to political demands—or holds the line on monetary tightening.

Source: CryptoSlate

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Michelle

Economic

Forex

Geen echte verrassing vanuit Threadneedle Street gisteren. De Bank of England (BoE) hield de rente onveranderd op 4.25%. Er waren wel enkele accentverschuivingen, zowel in het stempatroon als in de inhoudelijke analyse. Het blijven onzekere tijden, maar voorzitter Bailey en zijn beleidscomité blijven op koers om de rente geflankeerd door een driemaandelijks beleidsrapport in augustus opnieuw met 25 bpn bij te vijlen. Dat tempo is al in voege sinds de start van de versoepelingscyclus in augustus vorig jaar.

Inflatie ging de voorbije maanden over een hobbelig parcours. Na een stevige opwaartse verrassing in april, koelden prijsstijgingen in mei wat af. We schrijven wel nog steeds 3.4% J/J (was 2.6% in februari). De opsprong had onder meer te maken met wijzigingen in energie- en andere gereguleerde prijzen. Toch blijft de BoE hoopvol dat het onderliggende desinflatieproces zich doorzet. Omwille van technische factoren blijft inflatie dit jaar waarschijnlijk nog nabij het huidige niveau om volgend jaar (hopelijk) terug te keren richting 2%. De BoE blijft zich bewust van een tweezijdig risico (loonstijging & diensteninflatie, olieprijs, tariefonzekerheid versus het neerwaarts risico van een zwakkere vraag). Inzake groei zijn er na een sterk eerste kwartaal (0.7% kw/kw), tekenen van vertraging, zowel in de output als op de arbeidsmarkt. Dat laatste moet ook de loongroei temperen.

Wat de concrete beleidsbeslissing betreft, stemden drie van de negen raadsleden om de rente nu al met 25 bpn te verlagen. Twee ‘standaard-duiven’ en één bijkomende stem. Zij hebben vooral oog voor de afkoeling op de arbeidsmarkt. De zes andere leden willen nog iets meer duidelijkheid/bevestiging. Het beleidscomité vindt hoe dan ook dat het beleid nog even restrictief moet blijven en enkel volgens de weg van de geleidelijkheid kan worden teruggeschroefd. De terughoudende toon van Bailey op de persconferentie in mei en de inflatieopsprong deed de markt vorige maand twijfelen of er ruimte was voor meer dan één bijkomende verlaging dit jaar. Na de recent softere data (bevestigd door de BoE-analyse gisteren) aligneerden die geldmarkten zich opnieuw met het ‘één-per-kwartaal patroon’ (cumulatief 50 bpn tegen jaareinde tot 3.75%).

Het recente verlies aan rentesteun was geen hulp voor het pond. Na een kortstondige test beneden EUR/GBP 0.84 eind mei, deemstert het pond opnieuw weg tot boven EUR/GBP 0.85. Dat had echter ook te maken met de algemene onzekerheid/risico-aversie en met de moeilijke Britse budgettaire context (beperkte beleidsruimte, mogelijke druk op het lange eind van de Britse rentecurve). Die thema’s blijven sluimeren en wegen evenzeer op de Britse munt. Die krijgt vanmorgen overigens nog bijkomende tegenwind van uiterst zwakke kleinhandelsverkopen (mei). We zien EUR/GBP geleidelijk hoger trekken in de 0.8350/0.8740 handelsband met 0.8600/24 als intermediaire weerstand.

Source: KBC Bank

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Daniel Carter

Bond

Economic

U.S. Treasury yields were little changed on Friday morning, as markets continued to monitor the conflict between Israel and Iran in which President Donald Trump is considering ordering direct U.S. intervention.

The yield on the benchmark 10-year Treasury was last seen trading marginally higher, with yields on Treasurys across the board seeing little movement by 4:30 a.m. ET.

One basis point is equivalent to 0.01%. Yields and prices move in opposite directions.

As Israel and Iran continued trading fire on Thursday, White House Press Secretary Karoline Leavitt read a statement from Trump at a news briefing.

"Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks," the message from the president said.

That came a day after Trump said he had issued Tehran with an "ultimate ultimatum," telling reporters at the White House that he "may do it, may not do it," with regard to ordering a U.S. strike on Iran.

Later on Friday, the Federal Reserve Bank of Philadelphia will publish its June Manufacturing Business Outlook Survey.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

China–U.S. Trade War

Strategic Buying Counters Supply Increase

Alexander Dyukov, CEO of Gazprom Neft, has stated that ongoing efforts by the United States and China to rebuild their strategic petroleum reserves (SPRs) will counterbalance the potential oversupply expected from rising OPEC+ production. His comments, delivered at the Saint Petersburg Economic Forum, come as OPEC+ — including key players like Saudi Arabia and Russia — gradually unwinds voluntary output cuts through July 2025.

While the bloc is incrementally adding barrels back into the market, Dyukov emphasized that this increase is not anticipated to result in excess inventory or downward pressure on prices. Instead, large-scale reserve accumulation from the world’s two largest oil consumers is likely to absorb much of the additional supply.

U.S. Strategic Reserve Refill to Support Demand

Under the current U.S. administration, there is a renewed push to replenish the Strategic Petroleum Reserve (SPR), which had been drawn down to combat inflationary shocks and supply disruptions in recent years. Dyukov highlighted that the SPR has declined to about 400 million barrels — less than 20 days of national consumption — compared to its total capacity of over 700 million barrels. This shortfall implies substantial room for purchases in the coming months, offering a significant source of demand that could stabilize global oil prices even in the face of increased production.

The decision to rebuild the SPR reflects both energy security concerns and efforts to re-establish a buffer against future geopolitical shocks. The pace of U.S. purchases, however, will also be influenced by prevailing price levels and political considerations, particularly as energy prices remain a sensitive issue in domestic economic debates.

China’s Accelerated Reserve Accumulation Adds to Demand

China, too, has publicly committed to accelerating the pace of its strategic fuel reserve accumulation in 2025. While exact volumes are not disclosed, Beijing’s state-directed purchases are widely viewed as an instrument for price stabilization and future economic insulation. The Chinese government often increases reserve purchases during periods of price moderation, effectively creating a price floor when market sentiment is soft.

This behavior introduces a layer of artificial demand that can offset excess supply and dampen volatility. Dyukov’s assessment that these efforts will absorb surplus barrels underscores the geopolitical role of strategic reserves in moderating market balance, beyond purely commercial dynamics.

Outlook for Prices and OPEC+ Policy

OPEC+ is set to meet again in July to decide on August production levels. The return of approximately 1.2 million barrels per day to the market through July has so far been priced in by traders. According to Dyukov, continued stockpiling by the U.S. and China reduces the risk that this supply increase will lead to inventory buildup or downward price spirals.

By acting as buffer buyers, both Washington and Beijing are providing stability to a market that remains sensitive to geopolitical flare-ups, particularly in the Middle East. If strategic purchasing continues at current or higher levels, Brent prices could remain supported in the $75–85 range, barring major new supply disruptions.

Gazprom Neft’s outlook signals cautious confidence in the ability of strategic oil purchases by the U.S. and China to neutralize the short-term effects of increased OPEC+ production. These reserve accumulation efforts not only serve national energy security goals but also operate as a stabilizing force in global energy markets. As supply dynamics shift and geopolitical tensions linger, the interplay between strategic demand and voluntary output adjustments will play a central role in shaping oil market trajectories through the second half of 2025.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Commodity

Middle East Situation

Oil Prices Rise Amid Geopolitical Caution

Brent crude has approached $77 per barrel this month, marking its sharpest monthly increase since 2020. This rise is not yet fueled by supply interruptions, but investors are recalibrating expectations due to the heightened risk of disruption, particularly in the Strait of Hormuz, a strategic chokepoint through which nearly 20% of the world’s oil passes. The spread between short-term and six-month Brent futures contracts has widened to a six-month high, reflecting investor unease about regional supply security. Market attention is now turning to whether prices could breach the $80–100 per barrel range — a level analysts believe would exert substantial pressure on global economic activity.

While OPEC+ has announced an additional 1.2 million barrels per day in output, the market remains unconvinced. According to Svelland Capital, no material shipments have been delivered, and maritime logistics may become a bottleneck if the conflict intensifies. Disruptions in oil shipping lanes would exacerbate the problem, especially if China — home to the largest spare refining capacity — begins large-scale buying. Freight rates are thus seen as an early indicator of broader energy market shifts. For now, stable freight costs suggest that China has not yet engaged in panic purchasing, but any change in that behavior could accelerate a global price response.

Macroeconomic Effects of Oil-Driven Inflation

The recent price movement has revived memories of the inflation spike following Russia’s invasion of Ukraine. Economists warn that if oil prices sustain above $100 per barrel, global GDP could fall by 1%, and inflation could rise by the same margin. This dynamic is particularly threatening for net importers such as Turkey, India, Pakistan, and eastern European economies. Oil’s role as an inelastic input means there are few short-term alternatives, leaving these economies vulnerable to margin erosion and currency depreciation.

Even moderate increases can shift inflation expectations. In the United States, RBC estimates that if oil hovers around $75, core CPI could increase by 0.5 percentage points by year-end. In Europe, long-term inflation gauges like the five-year, five-year forward swap have already climbed to near-monthly highs.

Currency Dynamics: Dollar Weakness Softens the Blow

Traditionally, a surge in oil prices has been accompanied by a rising U.S. dollar, but 2025 has broken that trend. The dollar has weakened about 9% year-to-date, partly due to waning investor confidence in U.S. leadership under President Trump. The muted reaction of the dollar to the oil rally — gaining just 0.4% in the past week — suggests broader market skepticism about U.S. policy stability.

A weaker dollar partially offsets the inflationary impact of rising oil for many importing countries by making dollar-priced commodities relatively cheaper. For Europe, Japan, and emerging markets dependent on crude imports, this offers short-term relief, though underlying vulnerabilities persist.

Equity Markets Remain Cautious But Resilient

Global equity markets have, so far, shown a surprising level of calm. In the absence of an actual supply shock, investors appear inclined to wait rather than react. Energy and defense sectors have outperformed, particularly in the United States and Europe. Israeli equities have surged 6% in a week, reflecting both geopolitical risk pricing and possible investor hedging. Conversely, sectors sensitive to fuel costs — notably airlines — have been underperformers.

Gulf markets experienced initial volatility but have since stabilized, aided by the prospect of improved fiscal revenues from higher oil prices. Analysts at Goldman Sachs argue that until there is compelling evidence of deeper regional escalation, global equities will likely continue to hover near historical highs.

Brent crude’s steep climb in June 2025 serves as a warning signal for policymakers and investors alike. Although there has been no immediate supply interruption, market behavior indicates heightened sensitivity to geopolitical risks, especially those tied to the Middle East. While energy producers benefit and oil exporters see stronger revenues, the broader inflationary implications could soon challenge central banks, global consumption, and corporate margins. Whether oil stabilizes or surges further will determine whether this episode is a temporary flare-up — or the beginning of a renewed global energy crisis.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

A Strategic Shift to Save Europe’s Small Car Market

European automakers Stellantis and Renault have launched a joint lobbying campaign aimed at convincing EU regulators to ease safety and emissions rules for a new class of compact electric vehicles. This comes as Chinese carmakers — notably BYD — rapidly expand their footprint in Europe, offering feature-rich electric vehicles at significantly lower prices. Stellantis Chairman John Elkann and Renault CEO Luca de Meo are advocating for a European version of Japan’s “kei cars,” dubbed the “e-car,” that would help revive the once-thriving small car segment.

The shift represents both a defensive and proactive strategy. While Europe’s automakers had previously abandoned many compact models due to rising regulatory costs and shrinking margins, the market dynamics have changed. Chinese entrants are undercutting European brands by thousands of euros, and EU automakers now risk ceding not just low-end market share but long-term influence in the EV segment.

Chinese Competition Intensifies in Urban Mobility

Chinese manufacturers have so far focused on mid-sized and large EVs, but the launch of models like BYD’s Dolphin Surf — priced below €20,000 — signals their ambition to disrupt the affordable compact EV space. This is precisely the category Stellantis and Renault argue needs reform. The Dolphin Surf features amenities like a rotating touchscreen and anti-fog mirrors, yet remains significantly cheaper than comparable European models such as the Renault 5, which starts at nearly €25,000 with similar features.

The regulatory gap is central to this price difference. EU General Safety Regulations 2 (GSR2) mandates a series of safety technologies — including side airbags, driver drowsiness detection, lane assist, and stricter crash test compliance — that can increase production costs by €850 to €1,400 per car. Stellantis and Renault argue that these requirements are excessive for urban-focused vehicles that are unlikely to engage in high-speed travel.

The M0 Category: A Proposal for Deregulated Urban EVs

Backed by the European Automobile Manufacturers Association (ACEA), the lobbying effort calls for the creation of a new EU vehicle class known as M0, or “e-car.” This classification would allow for lighter safety and emissions standards tailored to city use. The European Commission is reviewing the proposal, but regulators face the challenge of balancing cost competitiveness with consumer safety expectations.

Skepticism remains high. Euro NCAP’s Matthew Avery cautioned that dismissing highway risks for small cars is misguided, as urban vehicles still encounter higher-speed environments. Lowering regulatory standards could result in models with only two or three stars in crash tests, significantly diminishing their appeal in corporate fleets and among safety-conscious buyers.

Industry Divides and Market Perception

BYD and other Chinese manufacturers oppose the deregulation push. Emmanuel Bret, deputy head of BYD France, dismissed European complaints as “a lot of excuses,” asserting that affordable and compliant EVs are possible under existing regulations. BYD has committed to selling small EVs that retain full EU safety compliance, challenging the narrative that high standards inherently make vehicles unaffordable.

This disagreement reveals a fundamental divergence in strategy. European manufacturers are seeking regulatory relief to maintain competitiveness, while Chinese entrants aim to demonstrate that cost and safety can coexist — potentially capturing the trust of both regulators and consumers.

Market Implications and Future Outlook

Although small cars currently represent only 5% of the European market, they once accounted for as much as 50% in the 1980s. Analysts at S&P Global believe the segment could rebound to 600,000 annual units by 2030 — a 20% increase from 2024 — if regulatory and pricing barriers are addressed. The lobbying by Stellantis and Renault signals not just short-term cost pressures, but a broader concern about losing relevance in an increasingly price-sensitive and innovation-driven EV market.

Whether the EU ultimately revises safety standards for compact EVs will determine how the competitive landscape evolves. For now, the contest between regulatory reform and cost-effective compliance is a defining test for the future of Europe’s automotive industry in a globalized EV economy.

The lobbying efforts by Stellantis and Renault underscore a growing urgency among European automakers to recalibrate industrial policy in response to surging Chinese competition. While their push for deregulation seeks to protect domestic production and revive the small car segment, resistance from regulators and rivals reflects the complexity of aligning safety, affordability, and innovation in a fast-changing EV market. As the EU weighs its options, the outcome will shape not only the future of urban mobility but also Europe’s position in the global electric vehicle race.