GBPUSD TECHS: Bull Channel Breakout Reinforces A Bearish Theme
- RES 4: 1.3142 High Jul 14 and the bull trigger
- RES 3: 1.3045 High Jul 19
- RES 2: 1.2887/2996 High Jul 28 / 27 and a key resistance
- RES 1: 1.2840 20-day EMA
- PRICE: 1.2714 @ 16:23 BST Aug 03
- SUP 1: 1.2621 Low Aug 3
- SUP 2: 1.2591 Low Jun 29
- SUP 3: 1.2480 1.50 projection of the Jul 14 - 24 - 27 price swing
- SUP 4: 1.2439 1.618 projection of the Jul 14 - 24 - 27 price swing
GBPUSD maintains a weaker tone and this week’s price action has reinforced bearish conditions. Wednesday’s sell-off resulted in a break of the key support highlighted by the the 50-day EMA and the base of a bull channel, drawn from the Mar 8 low. This strengthens a bearish theme and signals scope for weakness towards 1.2591, the Jun 29 low. First resistance is at 1.2840, the 20-day EMA.
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GBPUSD TECHS: Support Remains Intact - For Now
- RES 4: 1.2977 0.764 proj of the Mar 8 - May 10 - May 25 price swing
- RES 3: 1.2877 High Apr 25 2022
- RES 2: 1.2849 0.618 proj of the Mar 8 - May 10 - May 25 price swing
- RES 1: 1.2760 High Jun 27
- PRICE: 1.2728 @ 15:36 BST Jul 4
- SUP 1: 1.2591 Low Jun 29
- SUP 2: 1.2557/51 50-day EMA / Trendline drawn from the Mar 8 low
- SUP 3: 1.2433 Low Jun 8
- SUP 4: 1.2369 Low Jun 5 and a key support
GBPUSD remains above 1.2591, the Jun 29 low and a key near-term support. Friday’s price action could be an early reversal signal that suggests the recent corrective pullback is over. Resistance to watch is 1.2760, Jun 27 high. A break would expose key resistance at 1.2849, a Fibonacci projection. For bears, a resumption of weakness and a break of 1.2591 would resume the recent downtrend and expose the 50-day EMA at 1.2557.
OPTIONS: Limited July 4 Trade Includes Rate Steepener And Downside
Tuesday's US rates / bond options flow included:
- SFRZ3 94.00/93.75ps, bought for 1.75 in 10k
- FFV3/X3 paper paid 6.5 on ~9.7K.
- TYQ3 110.00 puts paper paid 0-09 on 2K, delta -15%.
STIR: US Rates Take Cue From ECB/BOE Pricing In Wafer Thin Holiday Trade
- Fed Funds implied rates have seen an unsurprisingly quiet session for Independence Day, holding a little lower in likely spillover from slightly softer peak ECB and BOE pricing.
- Ahead of Wednesday’s FOMC minutes and with payrolls firmly on the horizon, there is +21bp priced for the July FOMC (-0.5bp on the day), building to a cumulative +34bp to a 5.41% terminal effective rate in November (-0.5bp).
- It’s followed by 5bp of cuts to Dec’23 (-1bp) and 56bp of cuts to Jun’24 (-4bp).
- There’s a similar story in SOFR futures, with the largest gains seen in the SFRM4 (+0.04). The Z3 is the most active on the day with volumes of just 50k.
