BTP TECHS: (U5) Pullback Considered Corrective

• RES 4: 121.93 76.4% of the Dec 5 ‘24 - Mar 14 bear leg (cont)       
• RES 3: 121.43 1.618 proj of the Mar 14 - Apr 4 - 9 price swing    
• RES 2: 121.00 High Feb 7 (cont) and a key resistance  
• RES 1: 120.65 1.382 proj of the Mar 14 - Apr 4 - 9 price swing               
• PRICE: 119.95 @ Close May 6 
• SUP 1: 119.39 20-day EMA       
• SUP 2: 118.09 Low Apr 14       
• SUP 3: 117.28 Low Apr 10 
• SUP 4: 116.06 Low Apr 9    

BTP futures remain in consolidation mode. A bull cycle is intact and the contract is holding on to the bulk of its latest gains. The recent break of a key resistance at 120.39, the Feb 28 high, reinforces a bullish theme. Sights are on 120.65 next, a Fibonacci projection. Firm support to watch lies at 119.39, the 20-day EMA. The contract is overbought, a deeper pullback would unwind this trend condition.

Swedish April flash inflation was lower than analyst forecasts: Headline CPIF at 2.3% Y/Y vs 2.29% Riksbank, 2.4% consensus and CPIF ex-energy at 3.1% Y/Y vs 3.15% Riksbank, 3.2% consensus.

• Consensus for CPIF ex-energy was skewed towards a firmer 3.2/3.3% reading, so the downward surprise is notable. However, there are no details provided in the flash release.
• As such, this shouldn’t have a major impact on today’s Riksbank Executive Board meeting and tomorrow’s policy rate decision. On the margin, it may increase the likelihood of a dovish guidance tilt, opening the door to a cut later this year conditional on downside growth risks materialising (which is our expectation).
• The policy rate is firmly expected to be held at 2.25%.
• EURSEK is up 0.15% following the release, but NOKSEK has already unwound the initial 0.20% move lower.

• RES 4: 149.28 High Apr 3  
• RES 3: 148.27 High Apr 9
• RES 2: 146.33 50-day EMA and key resistance 
• RES 1: 145.92 High May 2
• PRICE: 143.02 @ 07:06 BST May 7
• SUP 1: 141.97 Low Apr 29   
• SUP 2: 139.79 1.382 proj of the Feb 12 - Mar 11 - 28 price swing
• SUP 3: 138.82 1.500 proj of the Feb 12 - Mar 11 - 28 price swing
• SUP 4: 138.07  Low Jul 28 ‘23

The primary trend direction in USDJPY remains bearish and gains since Apr 22 appear corrective. Resistance at the 50-day EMA, at 146.33, remains intact. A clear break of this average would highlight a possible reversal. Moving average studies are in a bear-mode position and continue to highlight a dominant downtrend. A resumption of the trend would open 139.79 next, a Fibonacci projection. First key support to watch is 141.97, the Apr 29 low.