EURJPY TECHS: MA Studies Highlight A Dominant Uptrend
- RES 4: 180.37 1.500 proj of the Jul 31 - Sep 29 - Oct 2 price swing
- RES 3: 180.00 Psychological round number
- RES 2: 178.94 1.236 proj of the Jul 31 - Sep 29 - Oct 2 price swing
- RES 1: 178.82 High Oct 30 and the bull trigger
- PRICE: 176.96 @ 07:56 GMT Nov 7
- SUP 1: 175.71 Low Nov 5
- SUP 2: 175.20/174.82 50-day EMA / Low Oct 17
- SUP 3: 173.92 Low Oct 6 and a gap high on the daily chart
- SUP 4: 173.67 Bull channel support drawn from the Feb 28 low
The trend in EURJPY is unchanged, it remains bullish and recent weakness is considered corrective. Moving average studies remain in a bull-mode position highlighting a dominant uptrend. Recent gains signal scope for an extension towards 178.94 next, a 1.236 projection of the Jul 31 - Sep 29 - Oct 2 price swing. Support to watch lies at the 50-day EMA, at 175.20. A clear break of this EMA is required to signal scope for a deeper retracement.
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Historical bullets
GILTS: Bull Flattening, Fiscal Situation Not Quite As Bad As Feared
Gilts firm alongside core global FI peers, with German data and some optimism around the French political situation providing wider support.
- As we noted earlier, errors in the ONS PSNB data mean that the UK’s fiscal situation is slightly more favourable than was previously envisaged, which has probably driven some gilt curve flattening.
- 10-Year gilts underperform vs. Bunds, with the spread 1bp wider on the day.
- Futures +26 at 90.80.
- Bears remain in technical control, initial support and resistance is located at 90.26 & 91.08, respectively.
- Yields flat to 1.5bp lower, 2s10s ~5bp off September closing lows, while 5s30s is ~2bp off its September closing low.
- Comments from BoE chief economist Pill are due this afternoon.
- Elsewhere, the DMO will come to market with a GBP5bln sale of the new 4.00% May-29 gilt.
EGB OPTIONS: Schatz Broken Put Condor
DUX5 107.10/107.00/106.90/106.70 broken p condor, sold at 5 in 5k.
OAT: Further Spread Tightening On Latest Headlines
OAT/Bunds tightens by a further 1bp as outgoing PM Lecornu points to a “shared will to have a budget by the end of the year”.
- This builds on the previously outlined optimism re: increased potential for a deal between Lecornu and the political left, which we detailed in a recent bullet.
