EURUSD TECHS: Corrective Cycle Remains In Play
- RES 4: 1.2081 High Jan 27 and key resistance
- RES 3: 1.2045 High Jan 28
- RES 2: 1.1975 High Jan 30
- RES 1: 1.1896 Low Jan 28
- PRICE: 1.1797 @ 16:08 GMT Feb 4
- SUP 1: 1.1776 Low Feb 2
- SUP 2: 1.1735 50-day EMA
- SUP 3: 1.1693 76.4% retracement of the Jan 19 -0 27 bull leg
- SUP 4: 1.1670 Low Jan 22
A corrective cycle in EURUSD remains in play following the sharp reversal from the Jan 27 high. Note that moving average studies remain in a bull-mode position and this suggests that the retracement has been a correction - for now. Support to watch is at the 50-day EMA, at 1.1735. A clear breach of this 50-day average would suggest scope for a deeper retracement. Initial firm resistance is at 1.1896, the Jan 28 low.
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EURUSD TECHS: Pierces The 50-Day EMA
- RES 4: 1.1919 High Sep 17 and a key M/T resistance
- RES 3: 1.1848 High Sep 18
- RES 2: 1.1808 High Dec 24 and the bull trigger
- RES 1: 1.1765 High Jan 2
- PRICE: 1.1715 @ 16:58 GMT Jan 5
- SUP 1: 1.1659 Low Jan 5
- SUP 2: 1.1639 50.0% retracement of the Nov 5 - Dec 12 bull leg
- SUP 3: 1.1615 Low Dec 9
- SUP 4: 1.1598 61.8% retracement of the Nov 5 - Dec 12 bull leg
The trend condition in EURUSD remains bullish, however a corrective cycle is in play for now. The pair has pierced support around the 50-day EMA, at 1.1683. A clear break of the average would signal scope for a deeper retracement and open 1.1639, a Fibonacci retracement. Key resistance has been defined at 1.1808, the Dec 24 high.
OPTIONS: 2026 Trade Picks Up With Large CS vs PS Buying In Sonia
Monday's Europe rates/bond options flow included:
- RX Wk2 124.5p, bought for 1 in 4k
- RXG6 127^ vs RX Wk2 126/128^^ x2, sold the Straddle at 90 in 1.5kx3k
- RXH6 126.50p, sold at 51.5 in 9.2k
- RXH6 128/129cs vs 126/125ps, bought the cs for 6 in 1k
- RXH6 129/127ps, bought for 127 in 2k (ref 127.27)
- ERM6 98.12/98.25/98.37c fly, bought for 0.75 in 5k
- ERZ6 97.93/98.43 call spread paper paid 8.25 on 5K.
- 0RH6 97.56/98.06^^, sold at 3 in 5.5k
- SFIH6 96.35/96.25/96.15p fly, bought for 1.25 in 4k
- SFIZ6 96.90/97.00cs v 96.35/25ps, bought the cs for 0.25, 0.50 and 0.75 in 20k total
BONDS: EGBs-GILTS CASH CLOSE: Bull Flatter Ahead Of FR, DE Inflation
European curves bull flattened Monday.
- Cash bonds posted a fairly indifferent start to the week's trade, in spite of weekend geopolitical volatility after the US's removal of the Venezuelan president.
- Early gains in core bonds on softer oil prices were tempered by a rise in equities/risk appetite and a rebound in oil, but ultimately yields resolved to the downside.
- A soft US ISM Manufacturing reading in mid-afternoon didn't have much immediate impact but help drag Treasury yields lower, helping EGBs and Gilts consolidate gains into the cash close.
- On the day, both the UK and German curves bull flattened, while periphery / semi-core EGB spreads tightened modestly.
- Tuesday's calendar highlight is flash December inflation data from Germany and France, both of which are expected to show some moderation - MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1.2bps at 2.127%, 5-Yr is down 2.3bps at 2.453%, 10-Yr is down 3bps at 2.87%, and 30-Yr is down 3.4bps at 3.507%.
- UK: The 2-Yr yield is down 1.5bps at 3.72%, 5-Yr is down 2.3bps at 3.938%, 10-Yr is down 3.1bps at 4.506%, and 30-Yr is down 2.7bps at 5.246%.
- Italian BTP spread down 1.4bps at 69.9bps / Spanish down 0.8bps at 43bps
