💶🔺EUR/USD Swap Differential Points to Move Higher: Cable FX Macro

• Following the U.S. July labour report, the EU-US swap rate differential spiked to the highest level in more than a year to around -91.2bps favouring USD. A less appealing USD rate's repricing took the EUR/USD rate up to test 1.10 a session after the spike in the swap differential

• We have seen a stabilization in the euro-dollar rate as the 1.10 level has been met with offers from fast money players. However, the swap differential continues to point higher, any move lower could be an opportunity for buyers to test waters above 1.10

• 1w EUR/USD risk reversals are now flat after ticking at 46bps in favour of calls on Monday session, this was the most bullish level seen since early 2022