EURJPY TECHS: Bear Threat Remains Present

• RES 4: 187.71 3.000 proj of the Oct 17 - Oct 30 - Nov 5 price swing
• RES 3: 186.87 High Jan 23 and the bull trigger
• RES 2: 183.23/186.36 20-day EMA / High Feb 9
• RES 1: 182.89 50-day EMA
• PRICE: 182.39 @ 16:24 GMT Feb 18
• SUP 1: 180.81 Low Feb 12 
• SUP 2: 180.10 Low Dec 5 ‘25 
• SUP 3: 179.30 23.6% of the Feb 28 ‘25 - Jan 23 bull cycle  
• SUP 4: 178.82 High Oct 30 ‘25  

EURJPY continues to test key support, at 181.32 today - the base of a bull channel drawn from the Feb 28 ‘25 low. A clear break of this level would highlight a stronger reversal and signal scope for a deeper retracement. A move down would open 180.10, the Dec 5 ‘25 low. Resistance to watch is 183.23, the 20-day EMA. Clearance of the average would instead signal a potential S/T reversal and the start of a fresh bull cycle inside the channel.       

On balance sheet issues, the January Minutes suggest comfort with inter-meeting funding market developments after the decision in December to initiate Reserve Management Purchases. 

• SOMA manager Perli told the FOMC that (quoting the Minutes):  "pressures in repo rates generally moderated. While repo rates increased notably at year-end, rate pressure was less than investors had generally anticipated. Money market contacts attributed the better-than-expected outcome to a variety of factors, including an increase in available liquidity due to the start of reserve management purchases (RMPs) and a lower Treasury General Account (TGA), the recent changes to standing repo operations' design and communications, the increased adoption of centrally cleared repo, and the overall preparedness of investors for year-end tightness."
• Meanwhile, the Fed Staff noted the "initiation of RMPs as well as Treasury bill paydowns contributed to a reduction in upward pressures on money market rates" while "Year-end pressures in short-term funding markets were subdued; conditions were supported by additional liquidity resulting from RMPs and a smaller TGA, increased take-up of standing repo operations, and some dealers locking in financing ahead of year-end."
• Additionally, Perli highlighted that standing repo tweaks including the removal of aggregate limits  "might have made market participants more willing to participate in these operations, as suggested by increased utilization relative to the pre-December period when market rates exceeded the rate on standing repo operations."
• There was a reiteration of the RMP plan which would see reserves "expected to increase until early April before dropping quickly and sharply as tax revenues flow into the TGA. At their trough, reserves were expected to be at a level comparable with what prevailed at year-end. Over most of the projection period, reserves were expected to fluctuate in a range close to $3 trillion."
• Separately, with the Fed staff's "projection for economic activity [] stronger than the one prepared for the December meeting", "the staff's inflation forecast was slightly higher, on balance, than the one prepared for the December meeting, reflecting the expectation that resource utilization would be tighter and the path of core import prices would be higher than previously projected. With the effect of higher tariffs on inflation expected to wane starting around the middle of this year, inflation was projected to return to its previous disinflationary trend." And "risks to the inflation projection continued to be viewed as skewed to the upside".

• Still bid, US equity indexes are paring gains late Wednesday after the January FOMC minutes revealed that "several" members wanted to keep open the possibility that the next Fed rate move could be a hike.
• IT, Energy/Materials and Consumer Discretionary sector shares remained supportive in the second half.
• A rebound in crude oil on increased middle east tensions (reports that the US is continuing to surge military assets to the Middle East) buoyed oil and gas stocks, while stronger Gold saw miners climbing as well.
• Carry-over support for chip makers after yesterday's story "Meta Deepens Nvidia Ties With Pact to Use ‘Millions’ of Chips" while late headlines added Meta has begun a "$65 Million Election Push to Advance A.I. Agenda" (NYT).
• Conversely, weakness in software and services, insurance and some pharmaceutical stocks continued to temper broader index gains.
• Earning expected after the close: Coeur Mining, CF Industries, Texas Pacific Land, Edison Int, DoorDash, Occidental Petroleum, Carvana, eBay and Blue Owl Capital.