EURUSD TECHS: Bear Flag
- RES 4: 1.1046 High Jan 2
- RES 3: 1.0998 High Jan 5
- RES 2: 1.0932 High Jan 24 and a reversal trigger
- RES 1: 1.0838/98 20-day EMA / High Feb 02
- PRICE: 1.0772 @ 05:44 GMT Feb 9
- SUP 1: 1.0724/23 Low Dec 8 / Low Feb 5 and 6
- SUP 2: 1.0712 61.8% retracement of the Oct - Dec bull leg
- SUP 3: 1.0656 Low Nov 10
- SUP 4: 1.0611 76.4% retracement of the Oct - Dec bull leg
EURUSD maintains a bearish theme and the pair continues to trade just above its recent lows. The recent pause appears to be a flag formation - a bearish continuation pattern. The recent sell-off confirmed a resumption of the downtrend. Sights are on 1.0724, the Dec 8 low, and 1.0712, a Fibonacci retracement. Clearance of this support zone would strengthen the bearish theme. Key resistance is 1.0932, the Jan 24 high.
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BUND TECHS: (H4) Bear Threat Remains Present
- RES 4: 140.00 Psychological round number
- RES 3: 139.39 3.764 proj of the Nov of the 13 - 17 - 24 price swing
- RES 2: 137.96/138.84 High Jan 4 / High Dec 27 and the bull trigger
- RES 1: 136.16 20-day EMA
- PRICE: 135.37 @ 05:27 GMT Jan 10
- SUP 1: 135.06 Low Jan 05
- SUP 2: 134.37 Low Dec 8 and a key support
- SUP 3: 133.42 Low Dec 4
- SUP 4: 132.89 50.0% retracement of the Oct 4 - Dec 27 bull phase
Bund futures are consolidating. A weaker tone remains in place and the contract is trading closer to its recent lows. Weakness below the 20-day EMA risks a deeper correction, which would open the key support at the Dec 8 low of 134.37. Momentum studies are pointing south, highlighting the short-term bearish threat. On the upside, a resumption of gains would open 138.84, the Dec 27 high and a bull trigger. INitial resistance is at 136.16, the 20-day EMA.
US TSYS: Holding Pattern Ahead Of US CPI Data
TYH4 is trading at 111-30, +0-01 from NY closing levels, after giving up early gains.
- Cash US tsys are trading flat to 1bp richer, with a steepening bias, in today’s Asia-Pac session.
- With little in the way of meaningful newsflow, US tsys' recent performance is best seen as a holding pattern ahead of US CPI/PPI data on Thursday/Friday.
- That said, another poor 10-year JGB auction result likely weighed on recent dealings.
JGBS: Bull-Flattening Maintained Despite Poor 10Y Auction Result
JGB futures are only slightly richer, +7 compared to the settlement levels, after giving up early gains in post-10-year supply dealings.
- There wasn't much in the way of domestic drivers to flag, outside of the previously outlined weaker-than-expected November labour and real cash earnings in morning trading. As a result, JGB futures drifted higher, hitting their session high at the lunch break.
- The 10-year auction however showed poor demand metrics once again. The low price failed to meet wider expectations, the tail lengthened, and the cover ratio only improved slightly to 2.904x from 2.823x at December’s auction. It is worth noting that December’s cover was the lowest seen at a 10-year auction since 2021.
- Nevertheless, the cash JGB curve has maintained its bull-flattening, with yields flat to 3bps lower. The benchmark 10-year yield is 0.8bps lower at 0.583% after a morning low of 0.564%.
- Cash US tsys are dealing flat to 1bp lower, with a steepening bias, so far today. In large part, the recent performance of US tsys is best seen as a holding pattern ahead of US CPI/PPI data on Thursday/Friday.
- Swaps curve has also bull-flattened, with swap spreads tighter out to the 5-year and wider beyond.
- Tomorrow, the local calendar is relatively light, with Tokyo Avg Office Vacancies and Leading & Coincident Indices as the highlights.
