US TSYS: Eurodollar/Tsy Options Roundup
Eurodollar option trade centered on calls, mirroring EGB derivatives flow Tuesday as yields continued to climb (30YY tapped 3.3922% high) and curves bear steepened (2s10s +7.036 to 10.902 by the bell).
- Directionally, flows were mixed. Some faded the sell-off in underlying futures -- looking for a rebound (5,000 Sep 95.87/96.12/97.25/97.50 call condors, 19.5; 10,000 Jul 96.68/97.06 1x2 call spds, 5.5). While others were more repositioning: Block total +20,000 Sep 96.75/97.00/97.25 call trees, 2.5 vs. -20,000 Sep 97.25/97.56/97.75 at 1.0 -- appeared to be a position roll-down/adjust.
- Treasury option volumes centered around position squaring of July options that expire this Friday.
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USDJPY TECHS: Support Remains Exposed
- RES 4: 133.11 High Apr 4 2002
- RES 3: 132.39 High Apr 15 2002
- RES 2: 131.96 1.00 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 1: 130.05/131.35 High May 12 / High May 9 and the bull trigger
- PRICE: 127.83 @ 20:53 BST May 20
- SUP 1: 127.03 Low May 19
- SUP 2: 126.95 Low Apr 27 and a key support
- SUP 3: 125.69 50-day EMA
- SUP 4: 125.09 Low Apr 14
USDJPY traded lower last Thursday. 127.52, the May 12 low has been breached and this exposes the next key short-term support at 126.95, the Apr 27 low. The current pullback is likely a correction, and this is allowing a recent overbought trend reading to unwind. A break of 126.95 would signal scope for an extension towards the 50-day EMA, at 125.69. A reversal higher and a move above 130.05, May 9 high would be a bullish development.
EURGBP TECHS: Bearish Threat Still Present
- RES 4: 0.8658 High Sep 29 2021
- RES 3: 0.8643 High Sep 30 2021
- RES 2: 0.8619 High May 12 and bull trigger
- RES 1: 0.8534 High May 16
- PRICE: 0.8555 @ 20:42 BST May 20
- SUP 1: 0.8393/ 0.8391 Low May 17 / 61.8% of Apr 14 - May 12 upleg
- SUP 2: 0.8367 Low May 2 and a key support
- SUP 3: 0.8337 76.4% retracement of the Apr 14 - May 12 upleg
- SUP 4: 0.8313 Low Apr 22
EURGBP remains above 0.8393, May 17 low. The recent bear leg is considered corrective, however, given the pace of the sell-off, an extension lower still appears likely. Price has traded through the 20- and 50-day EMAs and this exposes 0.8367, May 2 low and a key support. On the upside, initial firm resistance to watch is at 0.8534, May 16 high. A break would refocus attention on 0.8619, the May 12 high and bull trigger.
GBPUSD TECHS: Testing Resistance
- RES 4: 1.2772 High Apr 26
- RES 3: 1.2769 50-day EMA
- RES 2: 1.2638 High May 4 and a key resistance
- RES 1: 1.2525 High May 19
- PRICE: 1.2477 @ 20:32 BST May 20
- SUP 1: 1.2317/2156 Low May 17 / Low May 13 and the bear trigger
- SUP 2: 1.2081 76.4% retracement of the Mar ‘20 - Jun ‘21 uptrend
- SUP 3: 1.2000 psychological round number
- SUP 4: 1.1903 1.00 proj of the Apr 14 - 28 - May 4 price swing
GBPUSD is holding on to its recent gains. The pair has probed resistance at the 20-day EMA, at 1.2491. A clear break of this average would signal scope for a stronger short-term recovery and open 1.2638, the May 4 high and a key resistance. On the downside key support and the bear trigger is unchanged at 1.2156, the May 13 low. Initial support lies at 1.2317, the May 17 low.
