BUND TECHS: (M5) Trend Needle Points North

• After three days of significant rally, China's bond futures are lower today.  
• China's 10Yr bond future is lower by -0.27 at 108.913, having risen +0.605 yesterday.
• The recent rally has seen the 10YR break above all major moving averages, the nearest being the 50-day EMA of 108.13.
• China's 2YR bond future is lower by -0.05 at 102.60, touching the 100-day EMA of 102.6073 with the next key technical level the 200-day EMA of 102.58.
• Cash bonds are off too with the CGB 10YR at 1.66%, +2.5bps higher today. 

• RES 4: 1.1276 High Jul 18 ‘23 
• RES 3: 1.1214 High Sep 25 2024 and a key resistance 
• RES 2: 1.1188 0.764 proj of the Feb 28 - Mar 18 - 27 price swing  
• RES 1: 1.1144 High Oct 1 2024 / High Apr 3 and the bull trigger     
• PRICE: 1.0977 @ 05:38 BST Apr 8
• SUP 1: 1.0812 Low Apr 7     
• SUP 2: 1.0833 20-day EMA     
• SUP 3: 1.0733 Low Mar 27 and a key short-term support     
• SUP 4: 1.0684 50-day EMA and a short-term pivot level

EURUSD has pulled back from its latest high. For now, the trend condition remains bullish and a pullback is considered corrective. A key resistance at 1.0955, the Mar 18 high, was breached last week, confirming a resumption of the uptrend. It paves the way for a climb towards 1.1188 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support to watch lies at 1.0833, the 20-day EMA.

The 30-year bond auction delivered disappointing results. The low price came in at 100.00, falling short of dealer expectations according to a Bloomberg poll. The cover ratio declined to 2.9582x from 3.4997x, while the auction tail widened significantly to 0.75 — the largest since 2023 — up from just 0.12 previously, all pointing to noticeably weaker demand.

• This follows a 10-year auction earlier in the week, which showed mixed demand metrics.
• As noted in our auction preview, today’s supply lands against a backdrop of elevated global market volatility, following President Trump’s announcement of reciprocal tariffs last week.
• With these dynamics in play, today’s 30-year auction was always going to be a key test for investor demand amid ongoing uncertainty.
• The 30-year JGB remains approximately 1bp cheaper than pre-auction levels in early afternoon trading.