OUTLOOK: Price Signal Summary - Gilts Test Resistance
Jul-31 11:19
- In the FI space, Bund futures continue to trade above 128.84, the Jul 25 low. The sell-off on Jul 25 resulted in a test of the base of a 3.5-month range at the 129.00 handle. This key support remains intact for now. A hammer candle formation on Jul 25 and a bullish engulfing candle on Monday signals a potential reversal. Initial resistance to watch is 129.89, the 20-day EMA. A break of the Jul 25 low is required to confirm a resumption of the bear trend.
- Gilt futures are trading higher this week. Price has once again moved above the 20-day EMA, at 91.83 . Note too that the contract has also breached resistance at 92.15, the Jul 22 high. A continuation higher would open 92.42, the 50.0% retracement of the Jul 1 - 18 bear leg. On the downside, key support and the bear trigger has been defined at 91.08, the Jul 18 low.
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FOREX: Swiss Franc Outperforms, EURCHF Re-Approaching 0.9300
Jul-01 11:01
- With more of a focus on rate differentials returning to currency markets, the main beneficiaries of Tuesday’s extension of dollar weakness have been the low yielding JPY and CHF. While USDCHF continues to broadly mirror the performance of the dollar index, spot references below 0.7900 are notable, as the pair continues to trade at the lowest level since the removal of the EURCHF floor in 2015. The next technical target is 0.7827 - 1.618 projection of the May 1 - Sep 6 '24 - Jan 13 price swing.
- Dollar aside, levels for Cross/CHF are also worth flagging given the likes of CHFJPY traded to a fresh record high of 181.84 on Monday, and posted a 3.64% advance in June. Additionally, while EURCHF continues to broadly respect its well-established 0.9300-0.9430 range across the last two months, today’s 0.38% decline sees spot re-approaching the lower bound. A close below the 0.93 handle would certainly renew the focus on the key double bottom support, located around 0.9210. In similar vein, GBPCHF has traded to a two-month low this morning at 1.0850.
- Analysts have been citing the continued tailwind for the Franc from the strengthened relationship to the Euro and the notable outperformance despite an easing in geopolitical tensions. Some have cited there remain multiple paths to further CHF appreciation near-term, even against a potential backdrop of negative rates.
OUTLOOK: Price Signal Summary - WTI Bear Threat Remains Present
Jul-01 11:01
- On the commodity front, Gold traded lower Friday resulting in a breach of the 50-day EMA, and a trendline drawn from the Dec 30 ‘24 low. A clear break of both support points would signal scope for a deeper correction - this would expose $3245.5, the May 29 low. The metal has recovered from yesterday’s low and for now, this highlights a possible false trendline break. Stronger gains would refocus attention $3451.3, Jun 16 high. The bear trigger is $3248.7, the Jun 30 low.
- In the oil space, WTI futures maintain a softer tone following the reversal from the Jun 23 high. Support to watch is at the 50-day EMA, at $64.60. It has been pierced, a clear break of it would signal scope for a deeper retracement. This would expose $58.87, the May 30 low. On the upside, initial resistance to watch is $71.20, the 50.0% retracement of the Jun 23 - 24 high-low range. Key resistance is at $78.40, the Jun 23 high.
