EURJPY TECHS: Trend Structure Remains Bullish

• RES 4: 1.4000 Round number resistance  
• RES 3: 1.3946 High Aug 5 and a key resistance
• RES 2: 1.3942 2.0% 10-dma envelope   
• RES 1: 1.3839 High Oct 15 
• PRICE: 1.3774 @ 17:04 BST Oct 16
• SUP 1: 1.3725/3637 Low Oct 11 / 20-day EMA
• SUP 2: 1.3567 Low Oct 7 
• SUP 3: 1.3473/3420 Low Oct 2 / Low Sep 25 and the bear trigger
• SUP 4: 1.3413 Low Feb 9

Recent short-term gains in USDCAD confirm an extension of the bull cycle that started Sep 25. The pair has pierced 1.3822, the 76.4% Fibonacci retracement of the Aug 5 - Sep 25 bear leg. A clear break of this level would reinforce a bullish theme and open 1.3946, the Aug 5 high. Initial firm support to watch lies at 1.3637, the 20-day EMA. A pullback would be considered corrective and allow an overbought condition to unwind. 

The Dow Jones led US equity gains Wednesday, rising 0.8% vs 0.5% rises in the S&P 500 and 0.3% in the NASDAQ.

• 9 of 11 GICS subsectors in the S&P 500 were in the green - Consumer Staples (-0.2%) and Communication Services (-0.4%) lagged.
• Utiltiies (+2.2%) and Financials (+1.2%) led gains, with the latter benefiting from continued solid earnings from big banks including Morgan Stanley today pre-market (+6.8% on the day). Indeed the Dow's outperformance owed to a higher weighting toward higher-performing financials.
• Tech stabilized vs Tuesday's chipmaker-led fall, with info tech GICS up 0.3%.
• On that note, Netflix will be Thursday's earnings highlight after the close - MNI's calendar is here.

The Treasury curve bull flattened moderately Wednesday, with US instruments underperforming global peers.

• European core bonds, led by Gilts, had rallied sharply overnight after UK inflation came in softer than expected - Treasuries faintly echoed the move but the EGB/Gilt rally meant US yields continued to gain versus global counterparts.
• This was especially pronounced at the short end of the curve, with 2Y yields vs Germany at the widest levels since July (nearing 177bp) ahead of Thursday's ECB decision.
• Continued softness in crude oil prices helped support the space, with a late-morning fall in WTI to session lows below $70/bbl coinciding with a move to session highs for TYs (112-22), but both moves faded in early afternoon while equities gained.
• In data, September import prices pointed toward a little more upside to September PCE estimates via international airfares, but this was not a market mover. Earlier, MBA weekly data showed mortgage applications dropped by the most since April 2020 as rates rebounded.
• Corporate supply was highlighted by Goldman Sachs $5.5B 2-parter and Morgan Stanley $5.75B 3-parter, coming on the heels of favorable earnings reports.
• Dec 10-Yr futures (TY) last up 3/32  at 112-17 (L: 112-13 / H: 112-22), In cash, the 2-Yr yield is down 1.2bps at 3.9334%, 5-Yr is down 1.2bps at 3.8421%, 10-Yr is down 1.8bps at 4.0141%, and 30-Yr is down 2.1bps at 4.2992%.
• VP Harris is interviewed on Fox after the close (1800ET). Data flow picks up Thursday, with two key reports: weekly jobless claims (following up from the previous week's hurricane-impacted upside surprise) and retail sales. Chicago Fed Pres Goolsbee also makes an appearance at a careers event so unlikely to be a market-mover.