EUROZONE ISSUANCE: EGB Supply - W/C 26 May, 2025 (1/2)

• RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing 
• RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 2: 1.1608 High Nov 9 2021
• RES 1: 1.1573 High Apr 21 
• PRICE: 1.1350 @ 16:03 BST Apr 23
• SUP 1: 1.1308 Low Apr 23
• SUP 2: 1.1167 20-day EMA and a key support    
• SUP 3: 1.0919 50-day EMA and a short-term pivot level     
• SUP 4: 1.0805 Low Apr 3  

The trend in EURUSD remains bullish and the pullback from Monday’s cycle high is considered corrective. A bullish price sequence of higher highs and higher lows remains intact and note that moving average studies are in a bull-mode position too, signalling a continued dominant uptrend. The focus is on 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1167.

• Initial overnight price action was dominated by headlines emanating from President Trump, who said it was not his intention to fire the Federal Reserve Chair, Jerome Powell. The news provided a solid boost for the greenback as the market breathed a sigh of relief surrounding the pessimistic narrative attached to the US.
• Despite subsequently trading in a volatile manner, the US dollar index is gaining for a second consecutive session on Wednesday, registering a 0.75% advance as we approach the APAC crossover. This extends the bounce from Monday’s fresh 3-year lows to ~1.7%, with the DXY narrowing the gap back to the psychological 100 mark.
• Positioning dynamics appear to be leaning in favour of the greenback across the major pairs, as the likes of USDJPY and USDCHF look set to close the session with gains above 1%. For USDJPY, spot remains just shy of the overnight highs at 143.22, with initial firm resistance not seen until the 20-day EMA, at 144.90.
• Given the sensitivity of the Swiss Franc to souring sentiment in recent weeks, the recovery in risk appetite has understandably weighed on CHF. This brings USDCHF to 0.8280, a significant 3% recovery from the Monday lows. Resistance is seen at the prior breakdown point of 0.8333, the 2023 low.
• For EURUSD, we appear to be witnessing a technical correction, as even US treasury secretary Bessent remarked on the ‘substantial appreciation’ for the single currency. The softer price action and higher equity markets have weighed on EUR crosses, as the higher beta AUD and NZD relatively outperform.
• Separately, crude front month fell to a fresh low for the week on the potential for another increase in OPEC+ production in June. This in turn weighed on the Norwegian krona, prompting USDNOK to extend session gains to over 1%.
• German IFO data headlines the European calendar on Thursday, before US durable goods, initial jobless claims and existing home sales are scheduled.

The 5Y WI inches up to 3.992% from 3.990% earlier, 10.8bp rich to last month's tail (4.10% high yield vs. 4.095% WI).