OPTIONS: Larger FX Option Pipeline

• RES 4: 1.0198 High Sep 12 and a key resistance
• RES 3: 1.0051 High Sep 20
• RES 2: 1.0004 50-day EMA
• RES 1: 0.9998 Bear channel top drawn from the Feb 10 high
• PRICE: 0.9856 @ 15:12 BST Oct 5
• SUP 1: 0.9806/9735 Low Oct 4 / Low Sep 30
• SUP 2: 0.9636/9536 Low Sep 29 / 28 and key support
• SUP 3: 0.9501 1.382 projection of the Aug 10 - Sep 6 - 12 price swing
• SUP 4: 0.9469 Bear channel base drawn from the Feb 10 high

EURUSD faded off the bear channel top Wednesday, erasing much of the Tuesday strength into the close. This raises the importance of the key short-term resistance at 0.9998, the bear channel drawn from the Feb 10 high. Note too that the 50-day EMA intersects just above, at 1.0004. A break of these resistance points would strengthen bullish conditions and highlight a more significant reversal. Initial support to watch is 0.9806, Tuesday’s low.

• EDs are off session lows to limit the reaction to the ISM services beat to just 1.5-3 ticks lower across white to green packs.
• It keeps to a relatively narrow range for EDZ2 (currently -0.02) but with increasingly large declines thereafter (EDZ3 -0.11, EDZ4 -0.145) as 2023 rates and beyond recalibrate higher again. Peak yields seen in EDH3 with EDH3/EDZ3 rising 7.5 ticks to -0.30.
• Daly earlier noted the aim to hike rates and hold whilst not seeing a rate cut in 2023, whilst another ’24 voter in Bostic discusses inflation at 1600ET before a heavier speaking schedule tomorrow including Governors Cook and Waller.

Wednesday's Europe rates / bond options flow included:

• RXX2 134.50p, bought for 26.5 in 4k
• RXZ2 147.00 call bought for 82 in 10k