EURUSD TECHS: Corrective Bounce
- RES 4: 1.1007 High May 10
- RES 3: 1.0905 High May 16
- RES 2: 1.0838 50-day EMA values
- RES 1: 1.0807 20-day EMA
- PRICE: 1.0723 @ 16:00 BST Jun 2
- SUP 1: 1.0635 Low May 31 and the bear trigger
- SUP 2: 1.0608 Low Mar 17
- SUP 3: 1.0551 Low Mar 16
- SUP 4: 1.0516 Low Mar 15 and a key support
EURUSD traded higher again Friday before fading into the close. For now, short-term gains are considered corrective and the downtrend remains intact. Fresh trend lows this week reinforce bearish conditions. The 1.0653 objective has been breached, 76.4% of the Mar 15 - Apr 26 rally and this opens 1.0551, the Mar 16 low. A firm resistance is seen at 1.0807, the 20-day EMA. Clearance of this average is required to ease recent bearish pressure.
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EURUSD TECHS: Finds Support Below The 20-Day EMA
- RES 4: 1.1225 1.236 projection of the Mar 15 - 23 - 24 price swing
- RES 3: 1.1185 High Mar 31 2022
- RES 2: 1.1127 1.00 projection of the Mar 15 - 23 - 24 price swing
- RES 1: 1.1059/1095 High May 3 / Apr 26 and key resistance
- PRICE: 1.1054 @ 15:58 BST May 3
- SUP 1: 1.0942 Low May 2
- SUP 2: 1.0909 Low Apr 17
- SUP 3: 1.0864/31 50-day EMA / Low Apr 10
- SUP 4: 1.0788 Low Apr 3
EURUSD remains in an uptrend and has found support just below the 20-day EMA. Last week’s fresh cycle high reinforces a bullish theme. The focus is on 1.1127, a Fibonacci projection. Note that moving average studies are in a bull-mode condition highlighting bullish sentiment. Key short-term support has been defined at 1.0942, Tuesday’s low. A clear break of it would signal scope for a deeper correction, potentially towards 1.0864, the 50-day EMA.
OPTIONS: Busy In Rate Plays Pre-ECB
Wednesday's Europe rates / bond options flow included:
- RXM3 133/130ps sold at 24 in 2k
- RXM 133/131ps sold at 20 in 2k
- OEM3 116.50/115.50ps sold at 10.5 in 1k
- ERK3 96.25/96.00ps, bought for 1.5 in 3k.
- ERK3 96.25/96.00ps 1x2, sold at 1 in 2.5k
- ERM3 96.50/96.75/97.00/97.25 call condor bought for 3.75 in 5k
- ERU3 96.125/96.00/95.875/95.625 'broken' put condor bought for 1 in 10k
- 2NM3 96.50/97.00 call spread bought for 4.75 in 4k (Green June, underlying SFIM5)
BONDS: EGBs-GILTS CASH CLOSE: Peripheries Impress Pre-ECB
Gilts and Bunds traded mixed Wednesday, with yields climbing from morning lows as the post-close Fed decision and Thursday's ECB came into sight.
- The German curve twist flattened, while the UK saw a mostly parallel shift with yields up 3bp apart from 5Yrs which were up just 2bp.
- Periphery EGBs impressed, with 10Y Italy and Greek spreads respectively down 4bp and 9bp vs Bunds. Sharp BTP spread tightening into the cash close was noteworthy, ahead of the ECB decision Thursday.
- ECB and BoE hike pricing closed on firmer footing, up 3.7bp to 3.72% and 1.6bp to 4.93%, respectively. 25bp hikes are seen as near-locks for May.
- In the ECB's case, a 50bp raise tomorrow has about 15-20% probability attached. Our preview for Thursday's highlight - the ECB decision - is here.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is up 1.7bps at 2.641%, 5-Yr is unchanged at 2.245%, 10-Yr is down 1.1bps at 2.247%, and 30-Yr is down 0.9bps at 2.371%.
- UK: The 2-Yr yield is up 3.1bps at 3.768%, 5-Yr is up 1.8bps at 3.569%, 10-Yr is up 2.7bps at 3.696%, and 30-Yr is up 3.3bps at 4.095%.
- Italian BTP spread down 4.4bps at 187.1bps / Greek down 8.9bps at 184.7bps
