BUNDS: Some divergence between German and US Bonds
- Bund sees a small bid post Cash Open, but there's continued divergence between Germany and the US Treasuries, German Yields are rising, while Treasuries are falling with the latest leg higher in US Bond futures spurred by the Trump/Powell saga.
- US 10yr Yield is falling closer to 4.25%, this equated to 111.28+ Yesterday, but now equates nearer to 111.30 Today.
- For the German Bund, the initial key support is still eyed at the 2.60% mark in Yield term, this equated to 130.07 Yesterday.
- Small resistance moves down to 130.88, but better is seen towards 131.28, the contract did print a Fast Market high of 131.33 last Friday.
- There are no notable Data out of Europe, focus this afternoon will be on the third reading US GDP/core PCE, the prelim Wholesales/Durable Goods, and IJC.
- SUPPLY: Finland 2052 (won't impact Bund), US Sells $44bn of 7yr Notes.
- SPEAKERS: BoE Breeden, Bailey, ECB Guindos, Schnabel, Lagarde, Fed Goolsbee, Barkin, Daly, Hammack, Barr.
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BTP TECHS: (M5) Trend Needle Points North
- RES 4: 121.93 76.4% of the Dec 5 ‘24 - Mar 14 bear leg (cont)
- RES 3: 121.43 1.618 proj of the Mar 14 - Apr 4 - 9 price swing
- RES 2: 121.00 High Feb 7 (cont) and a key resistance
- RES 1: 120.72 High May 8 and the bull trigger
- PRICE: 120.57 @ Close May 26
- SUP 1: 119.34/00 50-day EMA / Low May 14
- SUP 2: 118.76/09 Low Apr 15 / 14
- SUP 3: 117.28 Low Apr 10
- SUP 4: 116.06 Low Apr 9
A bull cycle in BTP futures remains intact and recent weakness appears to have been a correction. Key support to watch lies at 119.34, the 50-day EMA. A clear break of the average would signal scope for a deeper retracement, and open 118.76 initially, the Apr 15 low. On the upside, key resistance and the bull trigger is at 120.72, the May 8 high. Clearance of this hurdle resumes the uptrend.
JPY: USDJPY is paring gains
- The USDJPY is starting to fade off its high, the latest 70 pips rally in the past Hour and a half was helped on the Reuters source story that the Japan's Ministry of Finance will consider tweaking the composition of its bond issuance plan for the current fiscal year ending in March 2026, which could involve trimming the issuance of super-long bonds as per two sources.
- The Dollar is seeing a small broader selling interest as Europe comes in, and looking forward, Bond desks will be watching the Japanese long end supply this Week, the 40yr Tomorrow.
EURJPY TECHS: Has Breached The 50-Day EMA
- RES 4: 166.69 High Oct 31 2024 and a key resistance
- RES 3: 166.10 High Nov 6
- RES 2: 165.21/43 High May 13 / High Nov 8 2024
- RES 1: 163.41/64.07 High May 22 / 15
- PRICE: 162.91 @ 07:56 BST May 27
- SUP 1: 161.09 Low May 23
- SUP 2: 160.99 Low Apr 22
- SUP 3: 160.01 50% Retracement Feb’25 - May’25 Upleg
- SUP 4: 159.48 Low Apr 9
EURJPY has recently traded through a key support at 162..30, the 50-day EMA. The clear break undermines a bearish theme and signals scope for a possible deeper retracement. This would open 160.99, the Apr 22 low. Clearance of this level would expose 160.01, a Fibonacci retracement. For bulls, a stronger resumption of gains would refocus attention on the bull trigger at 165.21, the May 13 high. First resistance is 163.41, high May 22.
