THB: Baht Knee-Jerks Higher On BoT Rate Decision, SET Index Advances
Spot USD/THB knee-jerked higher as the BoT announced an unexpected 25bp rate cut but the reaction move has been quickly erased and the pair last deals +0.080 at 33.788. The pair has been moving away from fresh cyclical lows (33.377) over the past couple of days and bulls now look for gains past the 50-EMA, which kicks in at 33.957.
- The BoT's rate decision has been a boon for the SET Index, allowing it to advance after the lunch break. The index printed its worst levels since 2020 yesterday and the broader downtrend remains intact, even if the latest uptick provides some incremental reprieve to bulls.
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BUNDS: A busy start ahead of a very busy Week
- It's a busier start for Bund Overnight as Risk Off dominated the session, already over a 30 ticks range ahead of a very busy Week, full of Data, Central Banks, and Month End to end the Week.
- The German Contract has gapped higher overnight, and stays underpinned/bid going into the Cash session, now breaking through 131.75, Friday's high.
- Note that the Tnotes (TYH5) has already fully cleared the Friday's high overnight, and the next immediate resistance is seen at 108.28+.
- For Bund a full clearance of 131.75, would open to 132.15 (20 day EMA), but better is seen at 132.22 and 132.57 initially.
- The opening gap would be down to 131.33.
- Today only sees the German IFO on the Data front.
- SUPPLY: Main focus will be on the heavy US Supply today, the US sells $69bn of 2yrs, and $70bn of 5yrs Notes.
- SPEAKERS: ECB Lagarde, Holzmann, Kazimir, Vujcic. Lagarde will be a pre-recorded message on receiving a prize, and we are unlikely to hear anything new ahead of the ECB this Week.
BTP TECHS: (H5) Resistance Hold For Now
- RES 4: 122.85 High Dec 11
- RES 3: 120.98 61.8% retracement of the Dec 11 - Jan 13 bear leg
- RES 2: 120.45 High Jan 2
- RES 1: 119.81 50-day EMA
- PRICE: 118.86 @ Close Jan 27
- SUP 1: 118.27/117.16 Low Jan 16 / 13 and the bear trigger
- SUP 2: 116.59 76.4% retrace of the Jun - Dec ‘24 bull cycle (cont)
- SUP 3: 116.07 Low Jul 8 ‘24 (cont)
- SUP 4: 115.45 Low Jul 3 ‘24 (cont)
The latest rally in BTP futures highlights a corrective phase. The 20-day EMA has been breached and this exposes the next firm resistance at 119.81, the 50-day EMA. Clearance of the 50-day average would strengthen a bullish condition. The medium-term trend condition remains bearish and the pullback from Wednesday’s high may be an early reversal signal. The bear trigger has been defined at 117.16, the Jan 13 low.
EURJPY TECHS: Key Resistance Remains Intact
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 and a key short-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 164.08 High Jan 24
- PRICE: 162.91 @ 07:10 GMT Jan 27
- SUP 1: 160.96/159.73 Low Jan 21 / 17 and key short-term support
- SUP 2: 159.51 61.8% retracement of the Dec 3 - 30 bull cycle
- SUP 3: 158.67 Low Dec 11
- SUP 4: 158.24 76.4% retracement of the Dec 3 - 30 bull cycle
EURJPY is trading closer to its recent highs. The latest recovery resulted in breach of resistance at 162.89, the Jan 15 high. This undermines a recent bearish theme and highlights scope for an extension higher near term, towards key resistance at 164.90, the Dec 30 high. Key short-term support has been defined at 159.73, the Jan 17 low. A reversal lower and a break of this level would reinstate the recent bearish threat.
