AUDUSD TECHS: Bear Flag Formation
- RES 4: 0.6750 50-day EMA
- RES 3: 0.6671 High Sep 22
- RES 2: 0.6610 20-day EMA
- RES 1: 0.6550 High Sep 26
- PRICE: 0.6408 @ 14:19 BST Oct 7
- SUP 1: 0.6363 Low Sep 28 and the bear trigger
- SUP 2: 0.6337 Low Apr 24 2020
- SUP 3: 0.6283 Low Apr 23 2020
- SUP 4: 0.6255 1.236 proj of the Apr 5 - May 12 - Jun 3 price swing
AUDUSD continues to consolidate and this pause in the downtrend appears to be a bear flag, reinforcing bearish trend conditions. The recent break of support at 0.6682, Jul 14 low and a bear trigger strengthened a bearish case and this maintains the broader downward price sequence of lower lows and lower highs. The focus is on 0.6337 next, the Apr 24 2020 low. Initial firm resistance has been defined at 0.6610, the 20-day EMA.
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AUDUSD TECHS: Approaching Key Support
- RES 4: 0.7040 High Aug 16
- RES 3: 0.7009 High Aug 26 and a key short-term resistance
- RES 2: 0.6926 50-day EMA
- RES 1: 0.6833/6879 High Sep 6 / 20-day EMA
- PRICE: 0.6728 @ 17:02 BST Sep 7
- SUP 1: 0.6699 Low Sep 7
- SUP 2: 0.6682 Low Jul 14 and the bear trigger
- SUP 3: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
- SUP 4: 0.6612 Low May 29
A bearish theme in AUDUSD remains intact. The extension lower last week strengthened bearish conditions and confirmed a resumption of the bear leg that started Aug 11. The move lower this week reinforces the bearish theme. Attention is on 0.6682, the Jul 14 low and a key support plus an important bear trigger. A break would confirm a resumption of the broader downtrend. Key short-term resistance is unchanged at 0.7009, Aug 26 high.
US TSYS: Treasuries Rally Back On Growth Concerns As Attention Turns To ECB, Powell
- Treasuries have seen a sizeable rally on softer growth fears, with yields helped lower early from continued China lockdowns, the latest being Chengdu extending lockdowns from tomorrow, which have coincided with oil woes. Not a direct driver but supportive of the move has been the Fed’s Beige Book more recently showing weak growth expectations over the next six to twelve months, along with at the margin a downward revision for Atlanta Fed GDPNow from 2.6% to 1.4% for Q3.
- September FOMC pricing slightly remains up on the day at 69bps after the earlier WSJ’s Timiraos piece leaning to a 75bp rather than 50bp hike but the terminal sees a modest trimming to 3.91% in Mar’23 from highs of 3.96%.
- Yields remain within yesterday’s even larger range though, with 2YY -6.2bps at 3.441, 5YY -8.8bps at 3.364%, 10YY -8.0bps at 3.269% and 30YY -8.8bps at 3.413%.
- TYZ2 trades 17 ticks higher at 116-04, pulling back after yesterday’s clearance of a bear trigger and today’s further low of 115-13+. The recent trend has been downward, but should today’s upward momentum continue, resistance is seen at 116-26 (Sep 2 high).
EURJPY TECHS: Impulsive Rally Extends
- RES 4: 145.00 Psychologicals round number
- RES 3: 144.28 High Jun 28 and key resistance
- RES 2: 143.85 1.764 proj of the Aug 2 - 10 - 16 price swing
- RES 1: 143.38 Intraday high
- PRICE: 143.55 @ 17:01 BST Sep 7
- SUP 1: 141.37/139.56 Intraday low / Low Sep 6
- SUP 2: 138.69/27 Low Sep 5 / 50-day EMA
- SUP 3: 137.03 Low Aug 29
- SUP 4: 136.02 Low Aug 25
EURJPY continues to climb as the Yen stays offered. This week’s impulsive gains reinforce current bullish conditions and the move higher maintains a positive price sequence of higher highs and higher lows. The cross has cleared resistance at 142.32, the Jul 21 high. The break opens 144.28, the Jun 28 high and the next major resistance. Firm trend support is seen at the 20-day EMA. The average intersects at 138.44.
