### POV: SHORT-TERM GAINS,..............>

EURO-DOLLAR: ### POV: SHORT-TERM GAINS, LONGER-TERM PAIN

- The recovery off YTD lows is likely to be capped around the 1.2000/20 area

which holds the 200-dma, however the overall trend and momentum indicators point

towards further falls.

- A close below 1.1945 today would mark the first 4 week fall in 14 months. The

last time this sequence extended to 5 weeks was 40 months ago (when the run

lasted for six weeks).

- The risk of fresh Italian elections are growing amid rising yield

differentials which has seen the US/German 10y at record highs of 243 bps.

- The MNI FX Technical Signal Monitor is generating a near clean sweep of

bearish trend signals. Seasonal patterns have seen EURUSD fall 7 of the last 8

years in May and is currently showing losses of 1.40%.

- The front end of the EURUSD risk reversals curve has shifted materially lower

over the past month, with maturities out to four months dropping at least 0.4

vol points, indicating an increasingly bearish EURUSD options market for at

least the next six months.