EU CREDIT UPDATE: Average Cash Moves (Source: MNI, Bloomberg Finance L.P.)
------------------------------------- B'mark (CBBT) IG IG Universe +1.4bp ...
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OUTLOOK: Price Signal Summary - EURUSD Pullback Would Ease Overbought Condition
- In FX, a strong bull cycle in EURUSD remains in play and yesterday’s impulsive rally strengthens a bull theme. However note that the uptrend is in an extreme overbought position and this highlights the risk of a corrective pullback - to unwind the overbought reading. The firm support to watch is at the 20-day EMA, at 1.1747. First support is at 1.1938, the 61.8% retracement of the Jan 27 high - low range. For bulls, a continuation higher would open 1.2147 next, the Jun 16 2021 high.
- A strong uptrend in GBPUSD remains intact and Thursday’s extension reinforces current conditions. The climb signals scope for a move towards 1.3889 next, a 1.00 projection of the Nov 4 - Jan 6 - Jan 19 price swing. Note that the trend is in an extreme overbought position and this highlights the near-term risk of a pullback that would unwind the overbought reading. Firm support to watch is at the 20-day EMA, at 1.3513. First support lies at 1.3726, the Sep 17 2025 high.
- USDJPY remains in the grip of a bear cycle. The sharp pullback this week concludes the recent bull cycle and marks the start of a corrective phase. The breach of both the 20- and 50-day EMAs, signals scope for a deeper retracement and sights are on 151.98 next, the 38.2% of the Apr 22 ‘25 - Jan 14 bull cycle. A break of this level would open 151.54, the Oct 29 ‘25 low. On the upside, initial firm resistance to watch is 156.01, the 50-day EMA. A recovery would allow an oversold position to unwind.
SOFR: Net Short Cover Most Prominent In Front End Futures On Tuesday
OI data points to net short cover being most prominent through the SOFR greens on Tuesday, before a mix of net long and short setting was seen in the blue pack as the futures strip twist steepened.
| 27-Jan-26 | 26-Jan-26 | Daily OI Change |
| Daily OI Change In Packs |
SFRZ5 | 1,397,557 | 1,398,695 | -1,138 | Whites | -33,770 |
SFRH6 | 1,411,630 | 1,428,813 | -17,183 | Reds | -23,082 |
SFRM6 | 1,378,584 | 1,376,988 | +1,596 | Greens | -6,639 |
SFRU6 | 1,375,214 | 1,392,259 | -17,045 | Blues | +13,036 |
SFRZ6 | 1,388,095 | 1,396,347 | -8,252 |
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SFRH7 | 1,008,425 | 1,025,729 | -17,304 |
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SFRM7 | 824,542 | 832,960 | -8,418 |
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SFRU7 | 802,167 | 791,275 | +10,892 |
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SFRZ7 | 850,326 | 866,528 | -16,202 |
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SFRH8 | 505,575 | 505,026 | +549 |
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SFRM8 | 433,959 | 431,036 | +2,923 |
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SFRU8 | 390,233 | 384,142 | +6,091 |
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SFRZ8 | 381,774 | 376,386 | +5,388 |
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SFRH9 | 215,414 | 209,612 | +5,802 |
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SFRM9 | 203,518 | 202,841 | +677 |
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SFRU9 | 165,636 | 164,467 | +1,169 |
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MONTH-END EXTENSIONS: US, EU and UK Bond Extensions
Would suspect more of a bid in UK Friday into the unofficial EU close.
Bloomberg Bonds:
- US Tsys: +0.05yr (small).
- EU Govies: +0.10yr (below average for Jan).
{gb} UK Govies: +0.16yr (decent vs +0.09 average for Jan).
MS Bonds:
- US Tsys: +0.03yr (tiny).
- EU Govies: +0.07yr (average).
- UK Govies: +0.11yr (decent but average for Jan).
