EURUSD TECHS: Corrective Cycle Extends

• Gold’s few uncertain days may be behind it as the rally began today as equities retreated.    
• As tariff headlines abounded and having opened at US$2,984.58 gold rallied in the Asian trading afternoon back above $3,000 to be $3,009.00
• The White House has said that it will be pursuing tariffs of up to 104% on Chinese goods whilst Chinese Premier Li said that his country had ‘ample tools’ to “fully offset” the tariffs.
• Whilst gold enjoys ‘safe haven’ status amongst investors, in times of high volatility investors seek liquidity, something gold does not exhibit.
• Chinese investors put a record 7.6 billion yuan into gold-backed exchange-traded funds last week, seeking safety amid trade war tensions.
• Gold appears to be the only safe haven at present again as even treasuries are getting caught in the cross fire today. 

NZGBs closed with a dramatic twist-steepening of the curve, with yields 13bps lower to 21bps higher. The short-end finished at its yield lows, while the long-end finished at its yield high. 

• The source of the move has been US tsys. Cash US tsys are currently trading 3-20bps cheaper across benchmarks, with the curve steeper.
• US long-end yields have risen for the third straight day amid growing cracks in the haven status of US government debt.
• Alongside the steepening of the curve, interest-rate swaps have extended their recent extreme outperformance of US treasury securities as traders sought to avoid costs associated with holding bonds.
• Yesterday, Trump officials confirmed 104% tariff on China went into effect at noon. Concurrently, China vowed to "fight to the end".
• Meanwhile, the RBNZ cut rates 25bp to 3.5% as was widely projected, due to significant spare capacity and a weaker outlook from “global trade policy” which should result in inflation staying close to the target mid-point.
• Swap rates closed 12bps lower to 14bps higher, with the 2s10s curve steeper and implied long-end swap spreads wider.
• RBNZ dated OIS pricing closed 1-10bps softer across meetings beyond April, with 117bps of easing by November 2025.
• Tomorrow, sell NZ$275mn of the 0.25% May-28 bond and NZ$225mn of the 4.25% May-34 bond.

• RES 4: 1.1276 High Jul 18 ‘23 
• RES 3: 1.1214 High Sep 25 2024 and a key resistance 
• RES 2: 1.1188 0.764 proj of the Feb 28 - Mar 18 - 27 price swing  
• RES 1: 1.1144 High Oct 1 2024 / High Apr 3 and the bull trigger     
• PRICE: 1.1052 @ 05:47 BST Apr 9
• SUP 1: 1.0882 Low Apr 7     
• SUP 2: 1.0844 20-day EMA     
• SUP 3: 1.0733 Low Mar 27 and a key short-term support     
• SUP 4: 1.0713 50-day EMA and a short-term pivot level

The trend condition in EURUSD is bullish and the latest pullback is considered corrective. Key resistance at 1.0955, Mar 18 high, was breached last week, confirming a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. Sights are on 1.1188 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 1.0844, the 20-day EMA.