EURJPY TECHS: Bearish Threat Remains Present

• RES 4: 187.95 High Apr 17 and the bull trigger   
• RES 3: 187.56 High Apr 30
• RES 2: 186.56 76.4% retracement of the Apr 17 - May 6 bear leg  
• RES 1: 186.20 High Jun 02
• PRICE: 185.68 @ 16:33 BST Jun 3
• SUP 1: 185.02/184.06 50-day EMA / Low May 14  
• SUP 2: 183.50 Low May 07
• SUP 3: 182.05 Low May 06 and a bear trigger
• SUP 4: 181.87 Low Mar 16 

A fresh cycle high in EURJPY yesterday, reinforces the current short-term bull cycle. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. A continuation higher would open 186.56, a Fibonacci retracement. Key support lies at 182.05, the May 6 low. Clearance of this level would highlight an important bearish development. Initial firm support is 184.06, the May 14 low.  

SOFR & Treasury options trade outlined below: leaning towards downside puts with a few exceptions (highlighted) in SOFR options. Underlying futures weaker but off midday lows - crude prices gaining again (WTI $96.32, +2.57). Projected rate pricing extends hawkish view vs. late Tuesday (*): Jun'26 at +.9bp (+0.5bp), Jul'26 at +3bp (+2.1bp), Sep'26 at +8.7bp (+7.1bp), Oct'26 at +12.5bp (+10.6bp), Dec'26 +20.1bp (+17.6bp). 

• SOFR Options:
  • +40,000 SFRZ6 98.00 calls, 2.0 ref 96.11
  • Blocks, 14,310 SFRZ6/SFRM7 97.00/98.00 call spd spd, 4.25 net/Red June over
  • -30,000 SFRZ6 96.50/96.87 call spds, 3.25
  • -2,000 SFRU6 96.06/96.43 strangle, 8.0 ref 96.25
  • +5,000 SFRZ6 97.00/97.25 call spds, 0.75 ref 96.125
  • +3,000 SFRZ6 96.62 calls w/ OQZ6 96.0/96.50 strangles, 46.5
  • +2,500 SFRZ6 95.75/96.25 3x1 put spds, +4.75 ref 96.115
  • +3,000 SFRU6 95.87/96.00/96.12/96.18 put condor, 1.0 ref 96.24
  • Block, 5,000 SFRZ6 96.31/96.43 put spds, 9.5 vs. 96.13/0.08%
  • 2,500 SFRZ6 96.00 puts ref 96.115
  • 7,000 2QM6 95.87/96.06 put spds ref 96.13
  • +8,000 SFRZ6 95.50/95.56/96.06/96.12 put condors, 2.0 ref 96.105 to -.11
  • Block, +3,000 SFRU7 95.00/96.00 put spds, 26.0 vs. 96.02/0.27%
  • +3,000 0QZ6 95.37/95.62/95.87 put flys, 2.0
  • Block, +2,500 SFRV6/SFRZ6 96.00/96.12 put spd spds, .25 net/Dec over
  • +4,500 SFRZ6 96.31/96.43/96.56 call flys, 1.0 ref 96.11 to .105
  • 9,000 SFRN6 95.93/96.06/96.18/96.31 put condors ref 96.25 to -.24
• Treasury Options:
  • Block, 3,000 TYN6 109/110 6x5 put spds, 2-07 net vs. 109-13.5/0.67%
  • over 22,000 wk1 TY 109 puts, 6 (exp Fri)
  • +44,000 TYQ6 108 puts, 23 ref 109-14
  • 2,000 USQ6 110 puts, 47 ref 112-03
  • 1,800 TYU6 106.5/107 put spds ref 109-16
  • 1,500 TYN6 107.5/108 put spds ref 109-16
  • +2,000 USQ6 112/114 call spds, 56 
  • -1,500 USQ6 111/114 call spds, 131
  • 7,500 TUN6 102.87/103.12 put spds vs. 103.5 calls, 2.5-3 ref 103-05.12
  • -2,000 TYQ6 112 calls, 7 ref 109-17
  • over 7,000 TYN6 108.5/109 put spds, 11 ref 109-17
  • +3,800 TYN6 109.25 puts, 26 ref 109-19

• That said, the broad stabilization in the unemployment rate since last summer suggests ex post that these dwindling breakeven estimates, including a previously dovish Fed Governor Waller quoting Fed staff, might have been overly pessimistic.
• Consensus currently sees the unemployment rate at 4.3% after it almost surprised higher with 4.34% in April.
• The rate has recently swung between 4.54% in Nov 2025 (government shutdown distortion worth circa +0.1pp) and 4.26% in Mar 2026 but it’s currently at a similar level to the 4.34% averaged in 3Q25 prior to the shutdown.
• As then Fed Chair Powell noted at the April FOMC press conference, a 4.3% unemployment rate is low and “pretty close to mainstream estimates of the natural rate.”
• Broader measures of slack should also be watched, after the underemployment rate rose two tenths to a four-month high of 8.2% in April although remained below the recent high of 8.7% high in November.