EUR: EURJPY and EURGBP Displaying Divergent Trend Signals
Jun-04 10:45
- A bullish theme in EURJPY remains intact. The latest recovery from the May 23 low, signals the end of the corrective pullback between May 13 - 23. If correct, the move higher also marks a resumption of the uptrend. Sights are on a cluster of resistance around the 165.00 mark, which has been of pivotal significance dating back to the BOJ’s intervention back in July last year.
- 165.21, the May 13 high remains the technical bull trigger, of which a breach would target a move towards 166.10 (Nov 6 high) and 167.40, a Fibonacci retracement. Key short-term support lies at 161.09, the May 23 low, where a break is required to highlight a stronger reversal and suggest scope for a deeper correction.
- Conversely, a downtrend in EURGBP remains intact following a false breach of the 50-day EMA. A sustained break of this average is required to highlight a stronger reversal higher. On the downside, support to watch lies at 0.8356, the May 29 low. Clearance of this level would resume the downtrend and open 0.8316, the Mar 28 low and a key support.
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US TSYS: Spring Holidays Dampens Volumes, Focus on Midweek FOMC
May-05 10:43
- Treasuries are running mixed on very light overnight volumes (TYM5 <190k) with multiple Spring holidays around the globe: Japan, China, HK, South Korea, as well as the UK, EU is open however.
- Focus on Wednesday's FOMC rate annc at 1400ET. The FOMC is expected to extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement.
- Monday data (prior, est): S&P Global US Services PMI final (51.4, 51.2), Composite (51.2, 51.2) at 0945ET; ISM Services Index (50.8, 50.3), Prices Paid (60.9, 61.4), New Orders (50.4, 50.0) & Employment (46.2, 46.0) at 1000ET.
- US Treasury auctions: $76B 13W & $68B 26W bill auctions at 1130ET followed by $58B 3Y Note auction (91282CND9) at 1300ET.
- Tsy Jun'25 10Y contract trades +3.5 at 111-08.5 (yld 4.3121, +.0038), lower half of narrow overnight range (111-06 low, 111-13.5 high). Curves twist steeper with Bonds lagging mildly firmer 2s-10s: 2s10s +2.636 at 50.868, 5s30s +2.664 at 89.544.
- Cross asset roundup: Bbg US$ index lower (-4.32 at 1220.19), Crude weaker (WTI -.70 at 57.59), Gold surges to 3313.22 (+72.73).
LOOK AHEAD: Monday Data Calendar: S&P Services/Comp PMIs, ISM Services, 3Y Note
May-05 10:20
- US Data/Speaker Calendar (prior, estimate)
- 5-May 0945 S&P Global US Services PMI final (51.4, 51.2), Comp (51.2, 51.2)
- 5-May 1000 ISM Services Index (50.8, 50.3), ISM Prices Paid (60.9, 61.4)
- 5-May 1000 ISM Services New Orders (50.4, 50.0), Employ (46.2, 46.0)
- 5-May 1130 US Tsy $76B 13W & $68B 26W bill auctions
- 5-May 1300 US Tsy $58B 3Y Note auction (91282CND9)
OUTLOOK: Price Signal Summary - USDJPY Resistance Remains Intact
May-05 10:14
- In FX, a corrective cycle in EURUSD remains in play. The trend structure is unchanged, it remains bullish. MA studies are in a bull-mode position signalling a dominant uptrend, and the latest move down is allowing an overbought condition to unwind. A resumption of gains would open 1.1608, the Nov 9 2021 high. Initial key support to watch is the 20-day EMA, at 1.1264. A break of this average would signal scope for a deeper pullback.
- The latest pullback in GBPUSD is considered corrective. A bearish tweezer top formation on the daily candle chart last Monday/Tuesday, highlights a short-term top. Support to watch lies at 1.3225, the 20-day EMA. A break of this level would signal scope for a deeper retracement. Note that moving average studies remain in a bull-mode position, signalling a dominant underlying uptrend. Sights are on 1.3510, a 1.236 projection of the Feb 28 - Apr 3 - 7 price swing.
- Recent gains in USDJPY resulted in a move through the 20-day EMA, undermining the bear trend. However, price action remains below resistance at the 50-day EMA, at 146.60. A clear break of this average would highlight a possible reversal. For now, gains are considered corrective. Moving average studies remain in a bear-mode position highlighting a dominant downtrend. A resumption of the trend would open 139.79 next, a 1.382 projection of the Feb 12 - Mar 11 - 28 price swing.
