EM LATAM CREDIT: Brazil: Jan/Feb External Corporate Calendar - Neutral

• RES 4: 158.87 High Jan 10 and a key resistance
• RES 3: 158.29 2.618 projection of the Sep 17 - 26 - Oct 1 price swing
• RES 2: 158.00 Round number resistance 
• RES 1: 157.89 High Nov 20 and bull trigger 
• PRICE: 156.36 @ 16:33 GMT Dec 10
• SUP 1: 155.51/154.35 20-day EMA / Low Dec 5 
• SUP 2: 153.71 50-day EMA  
• SUP 3: 152.82 Low Nov 7 
• SUP 4: 151.54 Low Oct 29 

Recent weakness in USDJPY appears to have been a correction and the recovery from last Friday’s low signals the end of the corrective phase. Moving average studies are in a bull-mode position highlighting a dominant medium-term uptrend. Sights are on the 158.00 handle. Key short-term support to watch lies at the 50-day EMA at 153.71. A clear breach of the average would signal scope for a deeper retracement.

• US rates have pared a large part of what was already an initially limited dovish reaction to the first look at the suite of FOMC communications.
• SOFR futures currently see largest post-1400ET rallies in H6 and M6 contracts, just +0.025, whilst the Z6 is back to just +0.01 after reversing 3.5 ticks.
• It keeps the terminal yield of 3.19% (Z6 and H7) close to yesterday’s highest close since July.  
• Nearer-term, Fed Funds futures still pointing to only 5-6bp of cuts priced for January and a next cut with June (cumulative 31.5bp) under a new Fed Chair.
• This first look includes the decision to unsurprisingly cut 25bp, three dissents (two hawkish, one dovish), the SEP which includes an unchanged median dot plot from September and the decision to buy $40B of monthly bills for the high end of estimates for reserve management purchases and earlier than our base case of starting in 1H26. Fed Chair Powell is next up at 1430ET. 

• The dollar index is holding on to the bulk of the post-Fed declines as markets digest the moderately dovish development surrounding the commencement of reserve management bill purchases on December 12.  This comes after reserves have declined to ‘ample levels’.
• The DXY falls to a fresh session low, extending the pressure seen across the majority of Wednesday trade. Greenback losses are reflective of the step lower in front-end US yields, with the 2-year now down 5bps on the session.
• USDJPY had a notable bump down to 156.11 from around 156.50 pre-announcement, although the pair has recovered over half the move since.
• Dollar declines are being better consolidated against the likes of EUR, GBP, AUD and NZD which stand towards the session’s best levels.
• AUDUSD stands out as we print a fresh recovery high and maintain the impressive rally from the November lows, while in similar vein, NZDUSD’s near 4% recovery has just met its first medium-term target at the 0.5800 pivot.
• The Swedish krona and Swiss Franc continue to outperform across G10.