OUTLOOK: Price Signal Summary - USDJPY Bull Trend Extends
Nov-19 11:58
- In FX, the trend structure in EURUSD remains bearish. Resistance to watch is 1.1669, the Oct 28 high. Clearance of this hurdle would strengthen a short-term bull theme and highlight a stronger reversal. Moving average studies are in a bear-mode position, highlighting a dominant downtrend and continue to suggest that gains since Nov 5 are corrective. A reversal lower would refocus attention on key support at 1.1469, the Nov 5 low.
- Key short-term resistance in GBPUSD is seen at the 20-day EMA, at 1.3198. It has been pierced, a clear break of it would signal scope for a stronger corrective cycle and expose the 50-day EMA, at 1.3297. Moving average studies remain in a bear-mode condition and continue to highlight a dominant downtrend. A reversal would signal the end of the correction and a resumption of the bear leg. The bear trigger is 1.3010, the Nov 4 and 5 low.
- USDJPY continues to appreciate, reinforcing bullish conditions. This also confirms once again, a resumption of the uptrend. Note that moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Sights are on 156.58 next, a 2.236 projection of the Sep 17 - 26 - Oct 1 price swing. Support to watch is 153.68, the 20-day EMA. A clear breach of the average is required to signal scope for a corrective pullback.
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FOREX: USD Index Hits New Daily High Into NY Crossover
Oct-20 11:57
The USD Index heads into the NY crossover at the highest levels of the day, topping Friday's high in the process. This puts EUR/USD briefly back below 1.1650 and has GBPUSD testing the 1.34 handle, adding to the evidence that the USD found a base on the back of Trump's optimism around a China deal, particularly as he called additional tariffs on Chinese imports as "not sustainable".
- With no tier one data due this week until Friday's rescheduled CPI print, and the Fed inside the media blackout period, market focus remains on geopolitics and leaders' meetings in the coming weeks (particularly Trump-Xi next week) and any prepwork that may take place this week.
- Vol markets are under pressure - particularly at the front-end of the curve. EURUSD one-week implied is pressured well toward YTD lows and saw very little benefit from capturing Friday's inflation print. This may signal markets seeing CPI as pretty inconsequential, particularly as the government shutdown drags on and the Fed's cutting cycle is well priced for 2 consecutive 25bps rate cuts.
US TSYS: Early SOFR/Treasury Option Roundup
Oct-20 11:57
Option desks reported mixed flow on modest overnight volumes. Treasury futures are holding mildly weaker, TYZ5 inside a narrow 4pt overnight range as the US Gov enters shutdown day 19. The Federal Reserve now in policy Blackout as of Late Friday through October 30. Projected rate cut pricing cools slightly vs. late Friday levels (*): Oct'25 at -24.7bp (-25.3bp), Dec'25 at -50.1bp (-50.9bp), Jan'26 at -63.7bp (-64.8bp), Mar'26 at -77.2bp (-77.9bp).
- SOFR Options:
- over +12,500 SFRZ5 96.12 puts, 0.5 ref 96.365/0.05%
- +2,500 SFRX5 96.75/96.87 call spds, cab
- -4,000 SFRZ5 96.25/96.37 call spds, 8.5
- +2,000 SFRM6 96.25/96.37 put spds, 2.0 ref 96.87
- 1,600 SFRH6 96.31/96.43 put spds
- 1,500 SFRM6 96.25/96.62/97.00 call flys
- +8,000 SFRG6 96.68/96.81/96.87/97.00 call condors, 1.75 ref 96.625 to -.63
- Treasury Options:
- over 5,000 TYX5 113.5/118 call spds on ratio
- over 5,000 FVX5 109.5 puts, 5.5 last
- -2,000 TYF6 113.5 straddles, 200 vs. 113-09/0.06%
- 5,900 TYX5 113 puts, 7-8 ref 113-13.5/0.08%
- -5,000 TUZ 104.75 calls, 5 ref 104-13
- +3,000 TYH6 107.5/109 put spds, 6
- 3,000 TYF6 110/112 put spds, 23 vs. 113-11/0.20%
OUTLOOK: Price Signal Summary - Bull Phase In Gilts Remains Intact
Oct-20 11:24
- In the FI space, despite strong selling pressure on Friday, a bull cycle in Bund futures remains intact. The impulsive nature of the latest rally and a fresh cycle high on Friday, paves the way for a test of the next key resistance 130.80, the Jun 13 high. Clearance of this level would strengthen the bullish condition. Note that the contract is overbought, a deeper pullback would allow this condition to unwind. Key support is 129.12, the 20-day EMA. Initial firm support is 129.44, the Sep 10 high.
- A bull cycle in Gilt futures remains intact and last week’s strong impulsive rally reinforces current conditions. Recent gains resulted in a breach of key resistance at 91.82, the Sep 24 high. The break opens 93.30 next, a 1.236 projection of the Sep 3 - 11 - 26 price swing. Note that the trend is overbought and a deeper retracement would allow this condition to unwind. Key support to watch lies at 91.39, the 20-day EMA. Initial firm support is at 91.82, the Sep 24 high and a recent breakout level.
