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• RES 4: 0.6976 2.00 proj of the Oct 13 - 27 - Nov 3 price swing
• RES 3: 0.6956 High Aug 30
• RES 2: 0.6909 76.4% retracement of the Aug 11 - Oct 13 downleg
• RES 1: 0.6744/6893 High Dec 20 / High Dec 13 and the bull trigger
• PRICE: 0.6723 @ 15:42 GMT Dec 21
• SUP 1: 0.6629 Low Dec 20
• SUP 2: 0.6585 Low Nov 21 and a key short-term support
• SUP 3: 0.6531 50.0% retracement of the Oct 13 - Dec 13 climb
• SUP 4: 0.6500 Round number support

A sharp sell-off in AUDUSD last Thursday signalled a S/T top and Tuesday’s move lower reinforced this turn. The 20-day EMA has been cleared and attention is on the 50-day EMA at 0.6662 - this average has been pierced. A clear break would suggest potential for a deeper retracement towards 0.6585, the Nov 21 low. On the upside, key resistance has been defined at 0.6893, Dec 13 high. A break would resume the recent uptrend.

• RES 4: 146.73 High Dec 15 and a key resistance
• RES 3: 145.83 High Dec 20
• RES 2: 143.50 Low Dec 14 and a recent breakout level
• RES 1: 142.00 Round number resistance
• PRICE: 140.19 @ 15:40 GMT Dec 21
• SUP 1: 138.81 Low Dec 20
• SUP 2: 138.43 4.0% 10-dma envelope
• SUP 3: 138.06 Low Sep 28
• SUP 4: 137.40 Low Sep 26 and a key support

EURJPY traded sharply lower Tuesday as the JPY rallied. A key support at 140.77, the Dec 2 low and a bear trigger, has been cleared. This marks a resumption of the bear cycle that started on Oct 21 and opens 138.06, the Sep 28 low and 137.40, the Sep 26 low and a key support. Initial firm resistance is seen at 143.50, the Dec 14 low and a recent breakout level. Short-term gains would likely be a correction.

• US Treasuries are holding onto a solid bull steepening, with 2YY -4.5bps and 10YY onwards -0.5-1bp after what had been some sizeable gyrations before and after the 20Y re-open stopped through for the second month.
• Data implications were mixed, with consumer confidence stronger than expected (but as a result of lowest inflation expectations since Sep’21) and existing home sales sliding even more heavily than expected.
• The combination sees longer end yields with minimal retracement of yesterday’s BoJ fallout whilst the curve continues to steepen with 2s10s of -53bps at highs since mid-Nov having been -80bps just last week.
• Tomorrow sees the third release for Q3 GDP whilst weekly jobless claims are of note after recent surprising resilience. Still no Fedspeak scheduled ahead of the Christmas break.

US 2s10s spread (bp) - showing mid not ask pricing per textSource: Bloomberg