EURUSD TECHS: Monitoring Resistance

• RES 4: 0.8694 High Jun 22 
• RES 3: 0.8652 High Jun 26 
• RES 2: 0.8635 76.4% retracement of the Jun 22 - Jul 15 bear leg
• RES 1: 0.8568/8612 50-day EMA / High Sep 25 and 28 
• PRICE: 0.8479 @ 16:11 BST Oct 06
• SUP 1: 0.8458 Low Oct 02
• SUP 2: 0.8455 Low Jul 15 and the bear trigger 
• SUP 3: 0.8374 76.4% retracement of the 2024 - 2025 bull leg
• SUP 4: 0.8356 Low 29 May ‘25

EURGBP has started the week poorly, extending last week’s losses in the process. The cross is further retracing the bull cycle between Jul 15 and Sep 25, and has cleared 0.8492, the 76.4% retracement point. This opens the YTD low of 0.8455. Initial firm resistance to watch is 0.8568, the 50-day EMA. Key resistance and the bull trigger has been defined at 0.8612, the Sep 25 and 28 high.      

EGB periphery and semi-core spreads fell sharply Tuesday amid a broad bond rally.

• Rather than any specific triggers, instead the move appeared to be the result of a confluence of factors including softer crude oil prices and a bounce in French OATs following the recent selloff.
• While French (and wider Eurozone) fiscal issues remain at the forefront, budget proposals presented Tuesday from French Presidential frontrunner Le Pen included a "golden rule" to "restore a budget surplus before 2028".
• In data, both French and Spanish August IP was weaker than expected, while German factory orders were skewed lower by volatile large-scale orders.
• German and UK yields mostly fell on the day in a flattening move, with weakness in the short end of the German curve a standout exception (large Schatz supply may have weighed).
• Periphery/semi-core spreads tightened 7-8bp to 10Y Bunds, with OATs among the outperformers.
• Wednesday's European calendar includes German industrial production data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.7bps at 3.112%, 5-Yr is unchanged at 3.25%, 10-Yr is down 1.5bps at 3.478%, and 30-Yr is down 2.1bps at 3.845%.
• UK: The 2-Yr yield is down 3.1bps at 4.817%, 5-Yr is down 3.1bps at 4.923%, 10-Yr is down 4.3bps at 5.375%, and 30-Yr is down 4.2bps at 5.903%.
• Italian BTP spread down 8.3bps at 105bps / French OAT down 7.8bps at 129.4bps  

• US Data/Speaker Calendar (prior, estimate). All times ET
• 10/07 0700 MBA Mtg Applications (-6.0%, --)
• 10/07 1100 NY Fed 1-Yr Inflation Expectations (3.58%, 3.64%)
• 10/07 1130 US Tsy $75B 17W bill auction
• 10/07 1300 US Tsy $39B 10Y Note auction re-open (91282CRF0)
• 10/07 1400 FOMC Meeting Minutes for September
• 10/07 1500 Consumer Credit ($18.062B, $15.0B)
• Source: Bloomberg Finance L.P. / MNI