IRAN: Fars News on Chinese Vessel Transits of Hormuz

• RES 4: 112-16   61.8% retracement of the Mar 2 - 27 bear leg 
• RES 3: 112-07   High Mar 18
• RES 2: 111-31   50.0% retracement of the Mar 2 - 27 bear leg 
• RES 1: 111-19/21   50-day EMA / High Apr 08
• PRICE:‌‌ 111-11 @ 11:07 BST Apr 14
• SUP 1: 111-22+ Low Apr 13
• SUP 2: 110-16/109-24   Low Apr 2 / Low Mar 27 and the bear trigger
• SUP 3: 109-22+ 1.764 proj of the Mar 10 - 13 - 18 price swing
• SUP 4: 109-12   2.000 proj of the Mar 10 - 13 - 18 price swing

The latest recovery in Treasuries appears corrective. Trend signals remain bearish, highlighted by moving average studies that are in a bear-mode position. Support to watch is 110-16, the Apr 2 low. A break would be bearish. For bulls, the next important resistance at 111-19, the 50-day EMA. Clearance of this average is required to signal scope for a stronger recovery that would open 111-31, a Fibonacci retracement.

TYM6 110.50 puts ~4.3K given at 0-25.

• Risk sentiment is consolidating its recovery on Tuesday, helped by a Reuters report that US and Iranian negotiating teams are set to return to Islamabad later this week. Cautious optimism surrounding a bridging of the gap on the nuclear issue has contributed to dollar underperformance, leading the DXY to its lowest levels since early March, just above the 98.00 handle.
• The building significance of 100.50 as a resistance cluster for the dollar index will be bolstering the market’s willingness to re-engage with the softer dollar view. However, we have flagged the relatively contained price action in FX markets to latest Middle East developments, as waning FX vol could be hinting at limited appetite ahead.
• Deutsche Bank has stated the dollar is bang in-line with a simple model that includes rates and oil. They highlight that as unusual, given normally a premium gets built in during big global events (eg, the 2022 energy spike, Trump election). DB say this is suggestive of a retreat from dollar assets, and is a bearish medium-term signal.
• The Euro’s heavy weighting in the DXY keeps EURUSD as the key proxy for broader dollar trends, and this morning’s price action has seen spot approaching 1.18, confirming once again an extension of a corrective cycle that started mid-March. Sights are on 1.1825 next, a Fibonacci retracement.