LOOK AHEAD: Eurozone Timeline of Key Events (Times GMT)

• RES 4: 122.56 0.764 proj of the Apr 9 - May 8 - 14 price swing (cont)
• RES 3: 121.88 0.618 proj of the Apr 9 - May 8 - 14 price swing (cont) 
• RES 2: 121.00 Round number resistance
• RES 1: 120.10/120.74 High Oct 1 / High Aug 5 and the bull trigger
• PRICE: 119.78 @ Close Oct 7
• SUP 1: 119.07/118.36 Low Sep 25 / 3 and key support         
• SUP 2: 118.00 Round number support
• SUP 3: 117.70 2.236 proj of the Aug 5 - 12 - 14 price swing  
• SUP 4: 117.36 2.500 proj of the Aug 5 - 12 - 14 price swing 

Short-term weakness in BTP futures still appears corrective and the trend condition remains bullish. The contract is trading in a range for now. Key short-term resistance and the bull trigger is 120.74, the Aug 5 high. A break of this hurdle would confirm a resumption of the trend. Initial support to watch lies at 119.07, the Sep 25 low. Clearance of this level would allow for a deeper short-term retracement towards key support at 118.36, the Sep 3 low.

NZD has sold off against all G10 FX peers following the RBNZ’s 50bp rate cut (STIRs priced ~34bp of easing ahead of the event).

• NZD/USD has broken September’s low, trading as weak as 0.5739.
• Immediate support comes in at the 61.8% retracement of the move from the year-to-date low to the year-to-date high (0.5728).
• All of the big 4 New Zealand banks now expect a 25bp cut in November, an outcome that is fully discounted by markets.
• Westpac entered a fresh NZD/USD short at 0.5748 in the wake of today’s RBNZ decision, targeting 0.5600 or lower, with a stop set at 0.5795
• They note that “the RBNZ clearly signalled an intent to stimulate a weak economy, such that a 25bp cut in November is highly likely (fully priced), and there is a possibility of another beyond that to take the OCR to 2.0% (only around 50% priced). Markets may gravitate towards pricing a 2.0% low during the weeks ahead. Meantime, the broad U.S. dollar appears to have found a base since July, with some upward momentum at present”.

• RES 4: 129.50 High Aug 5  
• RES 3: 129.44 High Sep 10 and key short-term resistance     
• RES 2: 129.13 High Sep 17 
• RES 1: 128.84 61.8% retracement of the Sep 10 - 25 bear leg    
• PRICE: 128.60 @ 06:53 BST Oct 8
• SUP 1: 128.24/127.88 Low Oct 1 / Low Sep 25       
• SUP 2: 127.61 Low Sep 3 and the bear trigger
• SUP 3: 127.46 1.00 proj of the Aug 14 - 15 - 28 price swing  
• SUP 4: 127.13 1.236 proj of the Aug 14 - 15 - 28 price swing  

Bund futures are in consolidation mode and trade closer to last week’s highs. The recent climb appears corrective. Initial resistance is seen at 128.84, a Fibonacci retracement point. A break of this level would signal scope for a stronger recovery and potentially expose key resistance at 129.44, the Sep 10 high. For bears, a resumption of weakness would open 127.88, Sep 25 low. Key medium-term support and the bear trigger lies at 127.61, Sep 3 low.