EURJPY TECHS: Bullish Conditions Intact
- RES 4: 166.11 2.0% 10-dma envelope
- RES 3: 165.43 High Nov 8
- RES 2: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 1: 164.63 High Mar 18 and the bull trigger
- PRICE: 163.50 @ 15:52 GMT May 9
- SUP 1: 161.82/60 50-day EMA / Low May 6
- SUP 2: 160.99 Low Apr 22
- SUP 3: 159.48 Low Apr 9
- SUP 4: 158.56 61.8% retracement of the Feb 28 - May 2 bull leg
A bullish theme in EURJPY remains intact and recent weakness is considered corrective. A print earlier this month above key resistance at 164.19, the Mar 18 high, is a positive development for bulls. A clear break of this hurdle would confirm a resumption of the upleg that started Feb 28, and open 164.90, the Dec 30 ‘24 high. First key support to watch is 161.82, the 50-day EMA. A clear break of it would undermine the bullish theme.
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EURJPY TECHS: Support Remains Intact
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 162.37/164.19 High Apr 7 / High Mar 18 and the bull trigger
- PRICE: 159.80 @ 15:45 GMT Apr 9
- SUP 1: 158.30 Low Apr 7
- SUP 2: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle
- SUP 3: 155.60 Low Low Mar 4
- SUP 4: 154.80 Low Low Feb 28
EURJPY continues to trade in a volatile manner. Recent weakness still appears corrective, and the strong rally off Monday’s low reinforces this theme. Key short-term support has been defined at 158.30, Apr 7 low. A break of this level is required to signal scope for a deeper retracement. For bulls, a resumption of gains would expose 164.19, the Mar 18 high and the bull trigger.
TARIFFS: Post-Liberation Day Tariff Levels Remain, But Borne By China
The EU is implied to be included in the US's announcement of a 90-day pause/10% rate, per a White House official cited by Bloomberg - though the article doesn't address the Mexico/Canada ambiguity mentioned earlier: "Countries that were hit with the higher, reciprocal duties that went into effect Wednesday will now be taxed at the earlier 10% baseline rate applied to other nations, with the exception of China, according to a White House official."
- Ex-CEA Chief Economist Ernie Tedeschi makes the following observation, on X.com: "Folks, a 10% broad tariff on everything plus 125% on China, is a 25pp increase in the effective tariff rate, even accounting for USMCA exemptions. That's almost exactly where 2025 tariff policy was this morning. It was just less concentrated on China & more weighted overseas".
- That math checks out, roughly speaking: China represented around 13% of US goods imports in 2024, so every 10% effective increase to the Chinese tariff rate = 1.3pp to the US overall effective import tariff rate. The pullback in the ex-China rate to a blanket 10% (not taking into account sectoral carveouts) for the 87% more or less offsets the 70bop China increase from 54% to 125%.
STIR: Late SOFR Option Adds
Bearish - call unwinds and vol sales:
- -10,000 0QM5 97.00/97.50 call spds, 5.0 ref 96.51 (paper +50K yesterday)
- +12,000 0QJ5 96.25 puts, 0.5 ref 96.56
- -5,000 SFRM5 96.50 calls, 4.5 ref 95.92
- +5,000 SFRJ5 96.00 calls, 2.0 ref 95.92
- -10,000 0QM5 97.00/97.50 call spds, 5.5 ref 96.535
- -4,000 SRH7 96.50 straddles, 120 ref 96.52
