US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target

• RES 4: 1.4200 Round number resistance
• RES 3: 1.4111 High Apr 4
• RES 2: 1.3977/1.4016 50-day EMA / High May 12 and 13
• RES 1: 1.3875 20-day EMA
• PRICE: 1.3819 @ 16:47 BST May 27
• SUP 1: 1.3686 Low May 26   
• SUP 2: 1.3643 Low Oct 9 ‘24
• SUP 3: 1.3579 1.500 proj of the Feb 3 - 14 - Mar 4 price swing 
• SUP 4: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing 

A downtrend in USDCAD remains intact and short-term gains are considered corrective. The pair has recently traded through support at 1.3751, the May 6 low. This confirmed a resumption of the downtrend and has maintained the sequence of lower lows and lower highs. Scope is seen for an extension towards the 1.3600 handle while further out, the move down opens 1.3420, the Sep 25 ‘24 low. Initial resistance is 1.3875, the 20-day EMA.   

Cash Treasuries weakened Wednesday after three flat/positive sessions, with some light bear steepening in the cash curve.

• Treasury-negative headlines/macro developments were actually limited (a long-end Japanese bond auction went softly overnight), with yields moving lower in early trade before pushing sharply higher in late morning.
• At that point Tsys, found a bid as 30Ys touched 5.00% with 10Ys just under 4.50%. Overall, trade was mostly within Wednesday's ranges.
• The session featured a very solid 5Y Note auction, which saw a 0.4bp trade-through and a record-high takedown for 5s by indirect bidders (and one of the lowest-ever primary dealer takeups), helping yields consolidate into the close.
• The May FOMC meeting minutes cast a lightly hawkish tone in MNI's view, with little to no emphasis on the possibility of tariff-driven inflation proving to be a one-off shock. However the accounts were seen as relatively stale given developments in the last 3 weeks, and met with limited market reaction.
• In data, regional Fed surveys (Dallas services, Richmond manufacturing and services) were mixed but generally saw some stabilization in May, while Redbook retail sales continued to indicate resilient consumer activity into late May.
• Latest cash levels: 2-Yr yield is up 0.9bps at 3.9901%, 5-Yr is up 3bps at 4.0635%, 10-Yr is up 3.2bps at 4.4753%, and 30-Yr is up 2.1bps at 4.9717%.
• Note that with the Jun/Sep futures roll all but complete (all contracts 90+% through), September becomes the front contract.
• Thursday's schedule includes the 2nd reading of Q1 GDP alongside weekly jobless claims, with appearances by Fed's Barkin, Goolsbee. Kugler, and Daly.

• RES 4: 0.6603 High Nov 11 ‘24  
• RES 3: 0.6582 High Nov 12 ‘24
• RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
• RES 1: 0.6537 High May 26  
• PRICE: 0.6416 @ 16:44 BST May 28
• SUP 1: 0.6378 2.0% Lower 10-day Bollinger Band
• SUP 2: 0.6376/57 50-day EMA / Low May 12    
• SUP 3: 0.6275 Low Apr 14 
• SUP 4: 0.6181 Low Apr 11 

AUDUSD trend signals remain bullish and the latest pullback is considered corrective. The pair has cleared a key short-term resistance at 0.6515, the May 7 high. This confirms a triangle breakout and marks a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement. Key support lies at 0.6379, the 50-day EMA. A clear break of this average is required to signal a potential short-term reversal.