FOREX: Clustered DXY Resistance Could Come into Play on Strong CPI Read
- EUR/USD spot rates succumbing to the pressure of the uptick in US yields (as we note above, there's been little newsflow and no headline driver for the modest moves), putting spot through yesterday's lows and within range of 1.0517, the 38.2% retracement for the upleg off the cycle low from mid-November, and next major support.
- Volumes show participation today just below average for this time of day - although at their strongest for the session so far on the latest step lower. This will likely remain the case headed into the US CPI print Wednesday - with today's schedule particularly quiet.
- EUR overnight vols have today crested just above 14 points - so below the prevailing levels seen pre-NFP last week (through which markets printed an 80 pip range ahead of the Friday cut). With tomorrow's print the last of the year and likely directly influencing next week's rate decision (a 25bps cut is over 80% implied in futures), an outside-of-consensus print will test the sustainability of the USD Index's stabilisation above December lows.
- While a stronger print may not rule out a December rate cut, the implications for 2025 rate guidance, as well as the latest set of FOMC quarterly projections, will keep key clustered resistance in the USD Index at 106.720-745 in consideration, a break above which brings the post-election highs back into question.
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Historical bullets
JGB TECHS: (Z4) Bounce Reverses
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 146.53 - High Aug 6
- PRICE: 143.70 @ 16:14 GMT Nov 08
- SUP 1: 143.39 - Low Nov 07
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
Prices fell further Thursday, extending the recent pullback. The return lower at the start of this week has culminated in a break of 143.57, marking both the Jul 17 high on the continuation contract as well as the Oct 22 low. For now, the 50-dma tops out at 144.32, and marks first resistance. A continuation higher would open 146.53, the Aug 6 high (cont) and a bull trigger.
US TSY FUTURES: BLOCK: Late 2Y/10Y Ultra-Bond Flattener
- Flattener crossed late Friday at 1645:30ET, DV01 $322,000
- -8,900 TUZ4 102-23.88, sell through 102-24.38 post time bid vs.
- +3,700 UXYZ4 113-16, post time offer
USDCAD TECHS: Trend Needle Points North
- RES 4: 1.4179 2.0% 10-dma envelope
- RES 3: 1.4000 Round number resistance
- RES 2: 1.3977 High Oct 13 and a key M/T resistance
- RES 1: 1.3959 High Nov 1 / 6
- PRICE: 1.3910 @ 16:29 GMT Nov 8
- SUP 1: 1.3836/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 2: 1.3744 50-day EMA
- SUP 3: 1.3611 Low Oct 8
- SUP 4: 1.3567 Low Oct 7
USDCAD reversed course Wednesday and recovered from Tuesday's low. The trend outlook is unchanged, it remains bullish. Attention is the key resistance at 1.3946, the Aug 5 high. This hurdle has been pierced, a clear break would strengthen the uptrend and open 1.3977, the Oct 13 high and a key medium-term resistance point. Initial firm support to watch lies at 1.3836, the 20-day EMA.
