EMERGING MARKETS: CEEMEA FX Price Signal Summary - Bear Threat In USDZAR Remains Present
Jul-10 11:16
- A bearish theme USDZAR remains intact for now and the sell-off between Jun 6 - 21, reinforces this set-up. That move lower resulted in a break of 18.0290, the May 21 low and a key support. The clear breach of it strengthens a bearish theme and opens 17.4193, the July 27 2023 low and a key support. Price action is likely to remain volatile. A stronger reversal higher would refocus attention on resistance at 19.0054, the Jun 6 high. Initial key resistance is 18.6627, the Jul 2 high. The bear trigger lies at 17.8689, the Jun 21 low.
- The path of least resistance in USDTRY is unchanged and remains up. Fresh cycle highs recently, highlight a resumption of the trend, and the pair has touched the 33.00 handle. The 20-day EMA has been pierced. The next support is at 32.4695, the 50-day EMA. Scope is seen for a climb towards the 34.00 handle, once a clear break of 33.00 has been confirmed.
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OUTLOOK: Price Signal Summary Bunds Sell-Off Exposes Key Support
Jun-10 11:15
- In the FI space, recent gains in Bund futures from 129.37, the May 31 low, appear to have been a correction. The contract breached the 20-day EMA and the next resistance to watch is 131.67, the 50-day EMA. A clear break of this average is required to suggest scope for a stronger recovery. For bears, a continuation lower would expose 129.37, the May 31 low, and a break of this level would resume the downtrend and open the 129.00 handle.
- Gilt futures traded lower Friday and the contract remains below last week’s high of 97.86 (Jun 4). For now, the recent climb is considered corrective. The next important resistance to watch is 97.86 and 98.04, 76.4% of the May 16 - 29 bear cycle. A clear break of the latter would strengthen a bull phase and signal scope for a climb towards 98.89, the May 16 high. A stronger reversal lower would refocus attention on key support at 95.33, May 29 low.
BTP: Targets the 2024 high in Yield
Jun-10 11:07
- Italian 10yr Yield didn't quite manage to break the 2024 high, but got close, printed a 4.055% vs 4.067% 2024 high, with the latter coinciding with the 38.2% retracement of the Oct/Dec fall situated at 4.069%.
Today, reference 115.53:
- 4.069% = 115.29.
- 4.100% = 115.03.
- 4.256% = 113.77 (50% retrace of Oct/Dec fall).
OPTIONS: Political Risk Drives Surge in EUR Options Activity, Downside in Focus
Jun-10 10:55
- Given the sharp uptick in volatility and breakout in EUR spot, no surprise to see EUR hedges trading in size and well ahead of average for this time of day. Notably, the break to multi-year lows in EUR/GBP has helped drive demand for downside exposure, led by 0.8375 vanilla puts and trades consistent with a sizeable 0.8300/0.8396 put spread rolling off in early August, thereby capturing the fallout of both the UK and French elections.
- No surprise to see the uptick in front-end vols across G10, and this is most clearly seen in EUR/GBP as the 1m contract captures both votes. 1m vols added 0.8 points today to touch the highest since mid-January, marking the biggest one-day gain since March last year (triggered by concerns surrounding the sustainability of Credit Suisse).
- This theme is mirrored in EURJPY options trade, as Y160 puts tip the put/call ratio over 2.00, however there are some signs of steadier EUR/USD markets, with near E3bln in calls trading across 1.0775, 1.0800, 1.0900 and 1.1125 strikes this morning alone.
