STIR: FED Reverse Repo Operation: Usage Surge Ahead Year End

• RES 4: 1.3175 High Oct 4 
• RES 3: 1.3048 High Nov 6 and a key resistance
• RES 2: 1.2739/2885 20- and 50-day EMA values 
• RES 1: 1.2688 High Nov 26  
• PRICE: 1.2671 @ 16:16 GMT Nov 27 
• SUP 1: 1.2487 Low Nov 22  
• SUP 2: 1.2446 Low May 9
• SUP 3. 1.2367 76.4% retracement of the Oct 4 ‘23 - Sep 26 uptrend 
• SUP 4: 1.2300 Low Apr 22 and a key support     

Markets underwent a corrective bounce Wednesday, despite the dominant downtrend in the pair. The pair continues to trade closer to its recent lows, with moving average studies in a bear-mode set-up. Sights are on 1.2446, the May 9 low. Initial firm resistance to watch is at 1.2739 the 20-day EMA - a level not tested on the Wednesday recovery. The short-term bounce is considered corrective and allows an oversold condition to unwind.

US President-elect Donald Trump has nominated retired General Keith Kellogg to serve as Assistant to the President and Special Envoy for Ukraine and Russia, a new position created by Trump to hasten the end of the war.

• Trump said in a statement on Truth Social: "Keith has led a distinguished Military and Business career, including serving in highly sensitive National Security roles in my first Administration. He was with me right from the beginning! Together, we will secure PEACE THROUGH STRENGTH, and Make America, and the World, SAFE AGAIN!"]
• Reuters reported in June that Kellogg's plan for ending the war, drafted alongside Fred Fleitz - who also served as a chief of staff to the National Security Council under Trump -, "involves freezing the battle lines at their prevailing locations and forcing both Kyiv and Moscow to the negotiating table."
• Reuters notes: "Under their proposed strategy, the U.S. would tell Ukraine that it would only get more American weapons if it enters peace talks. The U.S. would at the same time warn Moscow that any refusal to negotiate would result in increased U.S. support for Ukraine. NATO membership for Ukraine would be taken off the table for the immediate future."

• Take-up of the Fed's overnight reverse repo facility increased $21bn to $169.8bn today, lifting from levels close to the recent lows of $144bn from Nov 5.
• Usage could increase more notably at month-end.
• The number of counterparties fell further to 49 from 51 yesterday and 57 on Monday. That’s the lowest since Nov 1.
• On a related note from Wednesday’s FOMC minutes: Staff recommendations: “The first consideration focused on the possibility of a technical adjustment to the ON RRP offering rate. […] The staff also noted that lowering the ON RRP offering rate 5 basis points would align the ON RRP offering rate with the bottom of the target range for the federal funds rate and would probably put some downward pressure on other money market rates”
• “Some participants remarked that, at a future meeting, there would be value in the Committee considering a technical adjustment to the rate offered at the ON RRP facility to set the rate equal to the bottom of the target range for the federal funds rate, thereby bringing the rate back into an alignment that had existed when the facility was established as a monetary policy tool.”