EURGBP TECHS: Bullish Rally
- RES 4: 0.8553 High Dec 10/14 2021
- RES 3: 0.8543 2.0% 10-dma envelope
- RES 2: 0.8498 High Dec 23
- RES 1: 0.8493 High Mar 30
- PRICE: 0.8481 @ 16:31 GMT Mar 30
- SUP 1: 0.8386 Low Mar 29
- SUP 2: 0.8296 Low Mar 23
- SUP 3: 0.8278 Low Mar 7
- SUP 4: 0.8203 Low Mar 7 and the bear trigger
EURGBP traded higher again Wednesday, easing the current bearish threat. Key short-term resistance at 0.8458, Mar 17 high was broken and this highlights a short-term reversal. The break also confirms a resumption of the uptrend that started Mar 7 and signals scope for an extension higher near-term. The focus is on 0.8278, Mar 7 high (probed) and 0.8498, the Dec 23 2021 high. Initial support is at Tuesday’s low of 0.8386.
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EURUSD TECHS: Bearish Threat Remains Present
- RES 4: 1.1608 High Nov 9, 2021
- RES 3: 1.1558 38.2% retracement of the May ‘21 - Jan 28 sell-off
- RES 2: 1.1396/1.1495 High Feb 16 / High Feb 10
- RES 1: 1.1280/1313 Low Feb 14 / Intraday high
- PRICE: 1.1220 @ 17:05 GMT Feb 28
- SUP 1: 1.1106 Low Feb 24 and the bear trigger
- SUP 2: 1.1040 76.4% retracement of the Jan ‘21 - Mar ‘21 bull phase
- SUP 3: 1.0976 2.00 projection of the Jan - Jun - May ‘21 price swing
- SUP 4: 1.0871 Low May 25, 2020
EURUSD gapped lower at the Monday open, but recovered modestly from there. The pair remains vulnerable following last Thursday’s sell-off that breached support at 1.1280, the Feb 14 low and 1.1209, the 76.4% retracement of the recent Jan 28 - Feb 10 upleg. The break of the latter support has strengthened the bearish threat and also resulted in a probe of support at 1.1121, the Jan 28 low and a bear trigger. Firm short-term resistance is seen at 1.1280, the Feb 14 low.
EQUITIES: Stocks Settle Lower as Wave of Sanctions Pressure Roils Russian Assets
- Acute volatility across Russian currencies unsettled developed market equities on Monday, putting all three major Wall Street indices and European markets into the red. A wave of sanctions pressure prompted the USD/RUB rate to trade to fresh highs of 112 (an intraday gain of over 35%) at some points of the Monday session, and while Russian equities remained closed, US and European equities gapped lower.
- The e-mini S&P shed around 120 points at the open, but the losses were gradually recouped across European and US hours to put the index broadly flat following the London close.
- In the cash S&P 500, real estate and consumer staples made up the worst performers, while energy and industrials fared more favourably. Defense names were a particular source of strength, putting the likes of Northrop Grumman, Raytheon and Lockheed Martin among the index's best individual performers.
- E-Mini S&P technical conditions remain bearish however price remains above last Thursday's 4101.75 low. Short-term momentum studies highlight bullish divergence between price and this still suggests scope for corrective cycle higher.
STIR FUTURES: Pricing Out Of Hikes Boosts Inflation Expectations
- Eurodollars are off session highs but nevertheless have unwound 17.5bps of implied hikes in Dec’22 and 17bps in Dec’23 today.
- The rate path continues to have larger hikes through the whites and reds compared to just after the January meeting but terminal rates are now lower, 5bps in Dec’24 and 10.5bps in Dec’25.
- This has however further supported market-based inflation expectations measures. 5Y (3.21%) and 10Y (2.63%) breakevens touch new highs for the day and even 5Y5Y inflation swaps (2.47%) have continued the uptrend of the past few days.
- This leaves scope for potentially larger inversion of the curve as front-end pricing continues to show an aggressive hiking path to clamp down on inflation fears against medium-term growth concerns.
