EMERGING MARKETS: CEEMEA FX Price Signal Summary - EURHUF Pullback Allows An Overbought Condition To Unwind

Mar-06 11:51
  • EURHUF bullish conditions remain intact and the pullback from yesterday’s high is considered corrective. This is allowing a short-term overbought condition to unwind. Support to watch lies at 390.13, the Mar 5 low. For bulls, the recent breach of resistance at 394.67, the Aug 3 ‘23 high, strengthens a bullish theme and signals scope for a climb towards the 400.00 handle.
  • Trend conditions in EURPLN are unchanged. A bear threat remains present and sights are on 4.2935, the Dec 13 low and key support. Clearance of this level would confirm a resumption of the downtrend that started in September last year. This would open 4.2371, the Feb 14 2020 low. Initial firm resistance has been defined at 4.3405, the 50-day EMA. The key reversal trigger is 4.4124, the Jan 17 high.

Historical bullets

GBP: GBP/USD Range Breakout Could Be Significant

Feb-05 11:51
  • GBP/USD inches to new daily and pullback lows into NY hours, once again narrowing the gap with key support at the 1.2564 200-dma. The break below 1.2597 today is deemed technically significant and marks the end of the consolidation phase and a range breakout since the turn of the year.
  • As mentioned across other instruments, volumes are very healthy early Monday, aided by Powell's seemingly hawkish undertones in his 60 Minutes appearance overnight.
  • Currency futures volumes are no different, with the latest downtick in GBP helping futures to print activity >30% ahead of average for this time of day. Spot drift has dragged prices away from the larger option expiries for the Monday cut: £335mln rolling off at 1.2600 and £1.4bln at 1.2645-50.
  • BoE's Pill is set to appear later today, however his appearance on Friday may mean new policy messaging is limited, with ISM Services likely a bigger needle mover today.

OUTLOOK: Price Signal Summary - Bear Threat Remains Present In Gilts

Feb-05 11:48
  • In the FI space, Bund futures faced resistance on Friday and the contract is trading below its recent highs. A continuation lower would further undermine the recent bullish theme and expose key short-term support at 133.55, the Jan 25 low. A break of this level would strengthen a bearish threat. For bulls, clearance of last week’s high at 136.29 (Feb 1), is required to reinstate the recent bullish theme.
  • The trend needle in Gilt futures traded sharply lower Friday and have started this week on a bearish note. The move lower has defined a key short-term resistance at 100.62, the Feb 1 high. A break of this level is required to reinstate the recent bullish theme and this would open 100.76, 50.0% of the Dec 27 - Jan 25 bear leg. Key support and the bear trigger lies at 97.57, the Jan 25 low. A stronger reversal and a break of this support would confirm a resumption of bearish activity.

EURIBOR: OI Points To Mix Of Short Setting & Long Cover In Futures On Friday

Feb-05 11:44

The mix of Friday's weakness in Euribor futures and OI data points to the following positioning swings:

  • Whites: Apparent long cover in all contracts outside of what seemed to be short setting in ERH4. The former dominated in net pack OI terms.
  • Reds: A mix of short setting (ERM5 & Z5) and long cover (ERH5 & U5), with the former dominating in net pack terms.
  • Greens: Net short setting in all contracts outside of very modest long cover in ERU6. The former dominated in net pack terms.
  • Blues: Net long cover in all contracts outside of short setting in in ERZ7. The former dominated in net pack terms.
  • The U.S. labour market report provided the major input on Friday.
02-Feb-24 01-Feb-24 Daily OI Change Daily OI Change In Packs
ERH4 840,209 820,904 +19,305 Whites -72,361
ERM4 653,270 698,953 -45,683 Reds +9,116
ERU4 453,743 496,965 -43,222 Greens +6,035
ERZ4 427,818 430,579 -2,761 Blues -3,384
ERH5 391,078 393,367 -2,289
ERM5 351,711 350,092 +1,619
ERU5 259,151 261,419 -2,268
ERZ5 292,741 280,687 +12,054
ERH6 193,772 193,547 +225
ERM6 121,263 118,285 +2,978
ERU6 105,680 105,878 -198
ERZ6 101,710 98,680 +3,030
ERH7 71,973 72,073 -100
ERM7 57,207 57,310 -103
ERU7 46,565 51,408 -4,843
ERZ7 63,073 61,411 +1,662