EURGBP TECHS: Finds Support
- RES 4: 0.8494 High Aug 26 ‘24
- RES 3: 0.8474 High Jan 20 and a key resistance
- RES 2: 0.8428/8450 High Mar 18 / 11 and the bull trigger
- RES 1: 0.8395 High Mar 24
- PRICE: 0.8365 @ 16:47 GMT Mar 26
- SUP 1: 0.8333 Low Mar 26
- SUP 2: 0.8321 61.8% retracement of the Mar 3 - 11 bull leg
- SUP 3: 0.8391 76.4% retracement of the Mar 3 - 11 bull leg
- SUP 4: 0.8241 Low Mar 3 and a key support
EURGBP has traded lower before a mid-session rally. Wednesday’s strength off the intraday low highlights a possible reversal. A strong daily close Wednesday would strengthen the bullish significance of today’s bounce. Note that MA studies are in a bull-mode position. This suggests that the pullback from the Mar 11 high, has been a correction. Resistance to watch is 0.8395, the Mar 24 high. Key near-term support lies at 0.8333, today’s intraday low.
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EURGBP TECHS: Support Remains Exposed
- RES 4: 0.8378 High Feb 6 and a key resistance
- RES 3: 0.8361 50.0% retracement of the Jan 20 - Feb 3 bear leg
- RES 2: 0.8337 50-day EMA
- RES 1: 0.8324 20-day EMA
- PRICE: 0.8296 @ 15:55 GMT Feb 24
- SUP 1: 0.8265/8248 Low Feb 21 / 3 and bear trigger
- SUP 2: 0.8223 Low Dec 19 and a key support
- SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range
- SUP 4: 0.8163 123.6% retracement of the Dec 19 - Jan 20 bull leg
EURGBP is trading closer to its recent lows. A resumption of weakness would expose the key short-term support at 0.8248, the Feb 3 low. Clearance of this level would strengthen a short-term bearish condition. Note that the early February bounce continues to highlight a possible bullish reversal theme. Clearance of 0.8378, the Jan 6 high and a key short-term pivot resistance, would be a bullish development.
STIR: FED Reverse Repo Operation
RRP usage inches up to $76.818B this afternoon from $68.983B on Friday. Compares to Friday, February 14 low of $58.770B - the lowest level since mid-April 2021. The number of counterparties at 30 from 24 prior.
FOREX: Euro Remains Slightly Firmer Following German Election
- Overall, the smooth passage of the German election results has allowed currency markets to trade with a sense of calm on Monday, with the victory for Merz' CDU/CSU and the likely formation of a coalition with the SPD steering markets clear of any abrupt U-turns on policy - leaving the EUR to very modestly outperform on Monday.
- An initial rally to 1.0528 fell just shy of the January highs for EURUSD, which have capped the topside for now. Spot did edge lower across the US session and a brief bout of dollar strength helped EURUSD to bridge the gap to Friday’s close, briefly printing a session low of 1.0453.
- The aforementioned greenback strength was a result of a sharp selloff for major equity benchmarks, where notably the S&P 500 fell around 1.1% following the cash open. Coinciding with a bump lower for US yields, the Japanese Yen was boosted and AUDJPY fell quickly to a fresh session low in tandem.
- Equities have since recovered, leaving the USD index in very moderate negative territory on Monday. EURUSD has risen back to 1.0480 ahead of the APAC crossover and stands 0.25% higher on the session, with the Swiss Franc exhibiting similar strength vs the dollar. Elsewhere in G10, adjustments have been more moderate as markets continue to digest headlines from President Trump regarding the latest developments regarding a deal to end the Russia/Ukraine conflict.
- The Polish Zloty outperforms in the emerging market space, with recent fresh cycle lows in EURPLN (-0.51%) confirming a resumption of the downtrend. Sights are on the 2018 low of 4.1293, of which a break would place the cross at its lowest level since 2015.
- Upcoming - FOMC’s Goolsbee and Logan may speak and German final GDP will cross early Tuesday.
