EURUSD TECHS: Remains Above Support At The 20-Day EMA
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- PRICE: 1.1350 @ 16:33 BST May 7
- SUP 1: 1.1279 20-day EMA and a key support
- SUP 2: 1.1144 High Apr 3
- SUP 3: 1.1047 50-day EMA and a pivot level
- SUP 4: 1.0805 Low Apr 3
EURUSD is trading closer to its recent lows. The latest pullback appears corrective. The trend remains bullish - MA studies are in a bull-mode position signalling a dominant uptrend. The latest move down has also allowed an overbought condition to unwind. A resumption of gains would open 1.1608, the Nov 9 2021 high. Initial key support to watch is the 20-day EMA, at 1.1279. A break of this average would signal scope for a deeper retracement.
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EURUSD TECHS: Trend Condition Remains Bullish
- RES 4: 1.1276 High Jul 18 ‘23
- RES 3: 1.1214 High Sep 25 2024 and a key resistance
- RES 2: 1.1188 0.764 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 1: 1.1144 High Oct 1 2024 / High Apr 3
- PRICE: 1.0914 @ 16:44 BST Apr 7
- SUP 1: 1.0882 Intraday low
- SUP 2: 1.0824 20-day EMA
- SUP 3: 1.0733 Low Mar 27 and a key short-term support
- SUP 4: 1.0684 50-day EMA and a short-term pivot level
EURUSD has pulled back from last week’s high. The trend condition remains bullish and a move lower is considered corrective. Recent gains resulted in the break of key resistance at 1.0955, the Mar 18 high, confirming a resumption of the uptrend. It paves the way for a climb towards 1.1188 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 1.0824, the 20-day EMA.
INFLATION: US 5Y5Y Inflation Expectation Holding Lowest Levels Since 2021
- Today’s huge reversal of Treasury gains seen with the Asia open sees 5Y and 10Y yields 10.5/15.3bp higher from Friday’s close, driven entirely by real yields (+16.5/+18.7bp).
- Breakevens meanwhile have slid further: the 5Y is set for its lowest close since Dec (currently 2.344%, -6.5bp) and the 10Y for its lowest close since Sep (2.16%, -3bp).
- Turning to inflation swaps for a cleaner cross-market comparison, the US 5Y5Y may only be 1bp lower on the day at 2.30% in our calculation but it’s still 9bp lower than pre-“Liberation Day” tariff announcements and at levels that were last sustained in Sep 2021.
- The EUR 5Y5Y meanwhile at 2.08% is +0.5bp on the day and only 3bp lower than pre-Apr 2 tariffs. It’s only back close to levels seen prior to Mar 4 EU and German fiscal announcements as they continue to provide some relative buffer and with hopes for some further fiscal support (for example Spain last week announced a E14bn package to support industries).
LOOK AHEAD: Monday Evening & Tuesday Data Calendar
- Couple of events expected Monday include:
- Pres Trump press conference with Israel PM Netanyahu at scheduled at 1400ET.
- Chicago Fed Pres Goolsbee will be interviewed on CNN OutFront tonight at 1900ET.
- US Data/Speaker Calendar (prior, estimate)
- 08-Apr 0600 NFIB Small Business Optimism (100.7, 99.0)
- 08-Apr 1130 US Tsy $70B 6W Bill auction
- 08-Apr 1300 US Tsy $58B 3Y Note auction (91282CMW8)
- 08-Apr 1400 SF Fed Daly economic outlook
