MARKET INSIGHT: Price Signal Summary - EURUSD Path Of Least Resistance Remains Down

Jul-04 10:08

In the equity space, S&P E-Minis maintain a softer tone following last week’s move lower and reversal from 3950.00, the Jun 28 high. A resumption of weakness would open 3735.00, the Jun 23 low. A breach of this level would expose key support at 3639.00, the Jun 17 low and bear trigger. Clearance of 3950.00 is required to reinstate a short-term bullish theme. EUROSTOXX 50 futures traded lower this week following the reversal from Monday’s high of 3584.00. The move lower has exposed the key support and bear trigger at 3384.00, Jun 16 low. A break would resume the primary downtrend. On the upside, clearance of 3584.0 is required to highlight a potential short-term reversal.
In FX, the EURUSD trend needle still points south and the pair remains inside the bear channel drawn from the Feb 10 high. The channel top intersects at 1.0592 and this level represents a key short-term resistance. Attention is on 1.0350, May 13 low and the bear trigger. GBPUSD traded lower Friday before finding support. The move lower reinforces short-term bearish conditions with the focus on the bear trigger at 1.1934, the Jun 14 low. Resistance to watch remains 1.2406, the Jun 16 high. Initial resistance is at 1.2270, the 20-day EMA. The USDJPY path of least resistance remains up. Last week’s gains delivered a fresh cycle high and confirmed a resumption of the primary uptrend. Short-term retracements are considered corrective and initial support is at 134.27, the Jun 23 low. A resumption of gains would open 137.30 next, 1.50 projection of the Feb 24 - Mar 28 - 31 price swing.
On the commodity front, Gold weakened Friday but did recover from the session low. Last week’s move lower reinforces bearish conditions and attention is on the key support and bear trigger at $1787.00, May 16 low. This level was breached, briefly, on Friday. A clear break would confirm a resumption of the downtrend and open $1780.4 Jan 28 low. Key trendline resistance intersects at $1861.7. The trendline is drawn from the Mar 8 high. In the Oil space, WTI futures found resistance last week at Wednesday’s high of $114.05. A break of this hurdle is required to confirm a resumption of the recent recovery and open $116.58, the Jun 17 high. For bears, an extension lower would instead open key support at $101.53, the Jun 22 low.
In the FI space, Bund futures resumed their short-term uptrend last week and a bull cycle remains in play. The contract has traded above resistance at 149.00 and this has established a bullish price sequence of higher highs and higher lows on the daily chart. The focus is on 152.28, 76.4% retracement of the May 12 - Jun 16 bear leg. Gilts cleared resistance on Friday at 114.55, Jun 24 high The break highlights potential for a stronger short-term recovery and this has opened 117.48, 1.236 projection of the Jun 16 - 24 - 29 price swing.

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Historical bullets

USDCAD TECHS: Heading South

Jun-03 20:00

RES 4: 1.3077 High May 16 and the bull trigger
RES 3: 1.2982 High May 16
RES 2: 1.2896 High May 18 and a key resistance
RES 1: 1.2686/2755 High Jun 2 / 20-day EMA
PRICE: 1.2583 @ 16:06 BST Jun 3
SUP 1: 1.2551 Low Jun 3
SUP 2: 1.2472 2.0% 10-dma envelope
SUP 3: 1.2459 Low Apr 21
SUP 4: 1.2403Low Apr 5 and key support

USDCAD maintains a softer tone and the pair traded lower again Friday. Price has arrived at 1.2562, the 76.4% retracement of the Apr 5 - May 12 uptrend. A clear breach of the level would strengthen current bearish conditions and pave the way for weakness towards 1.2459, Apr 21 low and potentially 1.2403, the Apr 5 low and a key support. Key resistance is seen at 1.2755, the 20-day EMA.

AUDUSD TECHS: Trades Through Key Short-term Resistance

Jun-03 19:30

RES 4: 0.7465 76.4% retracement of the Apr 5 - May 12 bear leg
RES 3: 0.7400 Round number resistance
RES 2: 0.7343 61.8% retracement of the Apr 5 - May 12 bear leg
RES 1: 0.7283 High Jun 3
PRICE: 0.7221 @ 16:04 BST Jun 3
SUP 1: 0.7126/7036 20-day EMA / Low May 25
SUP 2: 0.6950 Low May 18
SUP 3: 0.6829 Low May 12 and the bear trigger
SUP 4: 0.6805 Low Jun 22 2020

AUDUSD traded higher Thursday before fading slightly through the Friday session. Thursday's rally resulted in a break of key resistance at 0.7266, the May 4/5 high. This strengthens bullish conditions and signal scope for a move towards 0.7343, a Fibonacci retracement. Note that the current bull cycle is still considered corrective. A reversal lower would refocus attention on the bear trigger at 0.6829, May 12 low. Initial firm support to watch is at 0.7036.

US TSYS: Compelling Case for 50Bp Hikes

Jun-03 19:22

Tsys futures trade weaker, off lows to near middle of session range on light volumes for a headline payroll session, TYU2 less than 950k after the bell. Tsys gapped lower following May NFP gain of +390k vs. +310k est, 30YY climbs to 3.1554% high, while yield curves steepened out briefly.

Fed hike expectations gained slightly out the curve while 50bp hikes at each of the next two meeting remain a lock. Implied Fed hikes firm slightly for meetings later in the year after payrolls. The 143bp for Sep takes it back to yesterday highs whilst the 199bp to year-end nudges 1bp higher and closes on the post May FOMC high of 202bps.
Limited react to S&P Global composite PMI revised 0.2pts lower in the final release, 53.6 in May. Short end eased after ISM Services index slightly softer than expected, falling from 57.1 to 55.9 (cons 56.5), still Seeing Covid-19 Impact.
Aside from data, market reacted negatively to reports of Elon Musk email to Tesla execs: "pause all hiring worldwide" late Thu. Reuters reported Musk would like to cut 10% of Tesla's workforce due to a "super bad feeling" about the economy. Musk clarified later in the day: hiring freeze for salaried employees while hourly jobs to rise.
Cleveland Fed Pres Mester states she wants to see "COMPELLING EVIDENCE INFLATION IS ON DOWNWARD PATH" implying the Fed will continue to hike past signs of inflation peaking. Follow up headline: Mester "COULD BACK 50 BPS SEPT. HIKE IF INFLATION DOESN’T COOL, Bbg.

Needless to say, nothing really new, markets not reacting to CNBC interview
Reminder Fed enters media blackout at midnight tonight. No significant data next Monday, but Tsy does have two bill auctions

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