EURJPY TECHS: Bearish Outlook
- RES 4: 143.85 High Jun 29
- RES 3: 142.32/36 High Jul 21 / 2.0% 10-dma envelope
- RES 2: 139.49/140.69 20-day EMA / High Jul 22
- RES 1: 138.13 Low Jul 26
- PRICE: 135.54 @ 16:10 BST Jul 29
- SUP 1: 135.40 76.4% retracement of the May 12 - Jun 28 climb
- SUP 2: 134.58 Low May 20
- SUP 3: 133.93 Low May 19
- SUP 4: 132.66 Low May 12 and a key support
EURJPY traded sharply lower Thursday and remained weak into the Friday close. Earlier cross breached support at 136.87, the Jul 8 low. Clearance of this level strengthens bearish conditions and paves the way for weakness towards 135.40 next, a Fibonacci retracement. Initial firm resistance is seen at 139.49, the 20-day EMA. Key resistance has been defined at 142.32, the Jul 21 high. A break would reinstate a bullish theme.
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EURJPY TECHS: Monitoring The 20-Day EMA
- RES 4: 146.74 High Dec 30, 2014
- RES 3: 145.00/58 Round number resistance / High Dec 31 2014
- RES 2: 144.58 0.764 proj of Mar 7 - 28 - Apr 5 swing
- RES 1: 144.28 High Jun 28
- PRICE: 142.95 @ 16:52 BST Jun 29
- SUP 1: 141.37 20-day EMA
- SUP 2: 139.45 Low Jun 17
- SUP 3: 138.97/37.85 50-day EMA / Low Jun 16 and key support
- SUP 4: 136.25 Low May 30
EURJPY traded higher Tuesday, delivering a fresh cycle high of 144.28. This high print has cancelled a recent 3-day candle pattern - evening star reversal. This reinforces the uptrend and a continuation higher would open 144.58, a Fibonacci projection. Key S/T support is at 141.37, the 20-day EMA. The cross has pulled back from yesterday’s high, a break of the 20-day EMA is required to once again highlight a potential top and short-term reversal.
US: Late Corporate Credit Update: Heating Up Again
Investment-grade corporate credit risk holding mildly high in late FI trade, upper half of narrow range as stocks recede amid thin participation: SPX eminis trading -9.25 (-0.24%) at 3816.75; DJIA +65.12 (0.21%) at 31010.79; Nasdaq -39 (-0.3%) at 11142.58.
- Investment grade risk measured by Markit's CDXIG5 index at 100.174 (+0.854); CDXHY5 high yield index at 97.132 (-0.418).
- Outperforming credit sectors (tighter or least wide): Health Care and Industrials sectors both (+0.9) followed by Technology and Utilities (+1.1).
- Lagging sectors (wider or least narrow): Materials (+3.1), Consumer Discretionary and subordinated Financials both +2.2.
CANADA: Skittish USDCAD With Important Data Tomorrow
- USDCAD has seen a volatile session to ultimately sit +0.1% at 1.2888, moving higher with Powell's participation on the ECB panel, with CAD again outperforming high beta majors.
- Widening front-end Can-US yield differentials have helped keep some downward pressure on USDCAD today but a REER almost completely in line with its historical average and recently trimmed net spec positions gives the pair room to run in either direction.
- Technicals have pointed to a short-term bullish reversal and initial resistance is close at 1.2917 (Jun 27 high), clearance of which could open a bull trigger at 1.3017 (Jun 23 high). As noted earlier, CIBC look for a sustained push above 1.30.
- Going against that in the very short-term is sizeable option expiry for tomorrow’s cut-off with 1.525B at 1.2750 although that could be too far away to offer much traction.
- Both Canadian GDP and US personal/incomes and core PCE inflation will be important drivers in the near-term.
