EURUSD TECHS: Heads South
- RES 4: 1.1229 High Jul 20
- RES 3: 1.1150 High Jul 27
- RES 2: 1.1065 High Aug 10
- RES 1: 1.0974 20-day EMA
- PRICE: 1.0868 @ 06:14 BST Aug 17
- SUP 1: 1.0862 Intraday low
- SUP 2: 1.0834 Low Jul 6 and a key support
- SUP 3: 1.0804 Low Jun 151
- SUP 4: 1.0756 Bull channel base drawn from the Mar 15 low
The trend needle in EURUSD continues to point south and the pair is trading lower today, extending the current bear cycle. Support at 1.0912, the Aug 3 low, has recently been cleared. This confirmed a resumption of the bear cycle that started Jul 18 and opens 1.0834 next, the Jul 6 low and a key level. Price is also trading lower inside a bull channel drawn from Mar 15. The base lies at 1.0756. Key short-term resistance is 1.1065, the Aug 10 high.
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BTP TECHS: (U3) Strong Reversal Off Lows
- RES 4: 117.60 High Jun 26 and the bull trigger
- RES 3: 117.10 High Jun 29
- RES 2: 116.50 76% retracement of the Jun 26 - Jul 11 sell-off
- RES 1: 115.82 61.8% retracement of the Jun 26 - Jul 11 sell-off
- PRICE: 115.23 @ 16:07 BST Jul 17
- SUP 1: 114.26/112.95 Low Jul 13 / 11 and the bear trigger
- SUP 2: 112.48 Low May 29
- SUP 3: 111.78 Low May 26 and a key support
- SUP 4: 111.00 Round number support
BTP futures reversed course on Wednesday last week and rallied sharply higher on Thursday. The climb has resulted in a break of the 20-day EMA at 114.95. A continuation higher would signal scope for a test of 115.82, the 61.8% retracement of the Jun 26 - Jul 11 sell-off. A break of this level would open 116.50, the 76.4% retracement point. Key support has been defined at 112.95, the Jul 11 low. A break would reinstate a bearish threat.
JGBS: Futures Richer, Mid-Range, Liquidity Enhancement Auction Tomorrow For OTR 1-5-Year JGBs
JGB futures are dealing in the middle of the Tokyo session range in afternoon trade, +7 compared to settlement levels.
- There haven't been many specific domestic drivers worth noting, except for the growing speculation surrounding a potential adjustment to the YCC policy at the upcoming policy meeting of the BoJ next week.
- JGB futures have a downside bias into the Japan inflation report due on Friday, according to Bloomberg. (See link ICYMI)
- May Tertiary Industry Index rises 1.2% m/m versus +0.4% est.
- The cash JGBs are trading mixed with yield movements ranging from 0.5bp lower (7-year zone) to 2.6bp higher (40-year). The benchmark 10-year yield is 0.3bp lower at 0.478%, just shy of its highest level in three months of 0.485% set on Friday.
- Swap rates are also mixed across the curve with changes ranging from +/-0.8bp. Swap spreads are generally wider out to the 7-year and tighter beyond.
- Tomorrow the local calendar has no data. The MoF does however plan to sell Y500bn at a Liquidity Enhancement Auction for OTR 1-5-year JGBs.
- Later today sees June US retail sales and industrial production, May US business inventories, and the July NAHB housing market index.
SCHATZ TECHS: (U3) Breaches The 20-Day EMA
- RES 4: 105.185 High Jun 15
- RES 3: 105.130 High Jun 26 and key near-term resistance
- RES 2: 105.055 High Jun 28
- RES 1: 104.995 High Jul 13
- PRICE: 104.850 @ 16:05 BST Jul 17
- SUP 1: 104.795/104.570 Low Jul 13 / 6 and the bear trigger
- SUP 2: 104.470 2.00 projection of the Jun 1 - 8 - 12 price swing
- SUP 3: 104.335 Low Mar 9 (cont) and a major support
- SUP 4: 104.264 2.382 projection of the Jun 1 - 8 - 12 price swing
Schatz futures remain in a downtrend and last week’s gains appear to be a correction - for now. The contract has traded through the 20-day EMA at 104.909. This signals scope for a climb towards 105.055, the Jun 28 high. Note that key short-term resistance is at 105.130, the Jun 26 high. Key support and the bear trigger has been defined at 104.570, the Jul 6 low. A break would confirm a resumption of the downtrend.
