GBPUSD TECHS: Bull Cycle Still In Play

US FI has trended lower today through Juneteenth holiday thinned trade as markets asses ongoing Middle East tensions despite the signed US-Iran deal. These include earlier social media headlines on the IRGC saying the Strait of Hormuz will remain closed, Iranian condemnation of Israeli attacks on Lebanon (but with Israel subsequently acknowledging the Hezbollah ceasefire), Trump rhetoric on playing out the 60 day deal window and Iran not getting any money, and most recently Wapo reporting US intelligence has warned that Israel is likely to undermine the Iran deal. 

• TYU6 closes early at 109-10+ off a recent session low of 109-09+ after steady losses overnight continued through the holiday-thinned US session.
• Cumulative volumes of 425k, whilst obviously very low, are relatively high for a US holiday.
• It has easily pushed through yesterday’s low and starts to eye Wednesday's post-FOMC low of 109-07+. Support is seen at 108-25 (Jun 8 low) whilst resistance is seen at 110-00/110-00+.
• Front rates meanwhile have pushed to new hawkish extremes, extending Wednesday’s slide on the hawkish SEP and Warsh.
• FF cumulative hikes from 3.63% effective: 10.5bp Jul, 25bp Sep, 31.5bp Oct, 42bp Dec building to 50.5bp Mar 2027 and 48.5bp Jun 2027.
• The SOFR peak implied yield sits at 4.18% (H7) for a fresh high since the start of the US-Iran war. 

• RES 4: 1.1797 High May 06 
• RES 3: 1.1677 Top of a bear channel drawn from the Apr 17 high
• RES 2: 1.1686 High May 29
• RES 1: 1.1637 50-day EMA
• PRICE: 1.1466 @ 16:48 BST Jun 19
• SUP 1: 1.1422 1.0% 10-dma envelope
• SUP 2: 1.1418 Low Jun 19
• SUP 3: 1.1411 Low Mar 13 and 16 and a key M/T support
• SUP 4: 1.1373 1.764 proj of the Jan 27 - Feb 6 - 10 price swing 

EURUSD has faded fast off resistance on the hawkish market interpretation of Warsh’s first Fed meeting. This confirms short-term gains as corrective. Key S/T support has been broken at 1.1500, the Jun 8 low. Clearance here confirms a resumption of the bear cycle, which initially targets late March levels of 1.1443. Resistance to watch remains 1.1637, the 50-day EMA, and 1.1686, the May 29 high. 

The MEF will look to sell the following at its auction on Wednesday:

• E2.0-2.5bln of the 2.20% Feb-28 BTP Short Term (ISIN: IT0005692410)
• E1.5-1.75bln of the 2.40% May-39 BTPei (ISIN: IT0005547812)