US-JAPAN: Major Gap Between US and Japan Stances On Trade/Tariffs

• RES 4: 120.20 High Dec 12 ‘24 (cont)           
• RES 3: 119.960 High Apr 7 and the bull trigger          
• RES 2: 119.600/780 High May 7 / High Apr 22
• RES 1: 118.722/119.068 50- and 20-day EMA values                                     
• PRICE: 118.260 @ 05:44 BST May 13 
• SUP 1: 118.240 Intraday low       
• SUP 2: 118.105 50.0% retracement of the Mar 6 - Apr 7 bull run  
• SUP 3: 117.680 Low Apr 9 and a key support  
• SUP 4: 117.600 Low Mar 28      

A bull cycle in Bobl futures remains intact, however, for now a strong bearish corrective phase is in play and Monday’s sell-off strengthens a near-term bearish theme. The contract has traded through the 50-day EMA and cleared 118.543, 38.2% of the Mar 6 - Apr 7 bull run. This exposes 118.105, the 50.0% retracement. Initial resistance to watch is 119.068, the 20-day EMA. A break would signal a potential reversal.

• RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 3: 1.1608 High Nov 9 2021
• RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
• RES 1: 1.1256/1381 20-day EMA / High May 2 - 6  
• PRICE: 1.1110 @ 05:55 BST May 13
• SUP 1: 1.1082/65 50-day EMA and a pivot level / Low May 12 
• SUP 2: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle 
• SUP 3: 1.0943 Low Apr 10    
• SUP 4: 1.0857 50.0% retracement of the Feb 3 - Apr 21 bull cycle

EURUSD maintains a softer tone and the pair traded sharply lower Monday. Recent weakness appears corrective and key trend signals remain bullish. However, the pair has breached the 20-day EMA and pierced 1.1082, the 50-day EMA. A clean break of the average would strengthen a bear threat. A key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction.

ACGBs (YM -11.0 & XM -7.5) are weaker and hovering near Sydney session lows. 

• NAB business conditions fell 1 point from a month earlier to 2 in April, the lowest since August 2020.
• Cash US tsys are ~2bps richer in today's Asia-Pac session after yesterday's heavy session sparked by news that the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
• Cash ACGBs are 7-10bps cheaper with the 3/10 curve flatter and the AU-US 10-year yield differential at -3bps.
• The bills strip has bear-steepened, with pricing -3 to -11.
• RBA-dated OIS pricing is 2-11bps firmer today with late 2025/early 2026 leading. This leaves meeting pricing 4-35bps firmer than levels before the release of Q1 CPI data on April 30. A 25bp rate cut in May is currently given a 96% probability, with a cumulative 82bps (117bps before the CPI data) of easing priced by year-end (based on an effective cash rate of 4.09%).
• Tomorrow, the local calendar will see Q1 Wage Price Index and Home Loans data.
• AOFM plans to sell A$1200mn of the 3.50% 21 December 2034 bond tomorrow and A$800mn of the 2.50% 21 May 2030 bond on Friday.