USDJPY TECHS: Strength Could Mark Start of Reversal
- RES 4: 148.27 High Apr 9
- RES 3: 146.87 50-day EMA
- RES 2: 146.54 Low Mar 11
- RES 1: 145.92 High May 2
- PRICE: 145.09 @ 09:05 BST May 2
- SUP 1: 141.49 Low Apr 23
- SUP 2: 139.79 1.382 proj of the Feb 12 - Mar 11 - 28 price swing
- SUP 3: 138.82 1.500 proj of the Feb 12 - Mar 11 - 28 price swing
- SUP 4: 138.07 Low Jul 28 ‘23
The bounce in USDJPY that started Apr 22 has firmed, working against the view that S/T strength is corrective. Resistance at 144.06, the 20-day EMA, has been broken. A clear break of this level would signal scope for a stronger recovery. Resistance at the 50-day EMA, is at 146.72. Moving average studies remain in a bear-mode position highlighting a dominant downtrend. A resumption of the trend would open 139.79 next, a Fibonacci projection.
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EGBS: Citi Retain Long Duration Bias Into Tariff Announcement, Eye IRISH In MT
Citi note that “even after adjusting for fiscal spending, Bunds lag by around 15bp on a regression with a basket of tariff-sensitive EUR equities”.
- They go on to write “into today’s tariff announcement, we prefer bullish/dovish exposure to EUR duration. For EGB spreads, the indifference towards richening Bund swap spreads has tended to be short-lived in the past”.
- “The recent EGB resilience might have been driven by relatively clean positioning, investors waiting for more clarity and prospects of more ECB rate cuts in case of punitive tariffs but ignores their growth implications.”
- As a result, they “retain bearish exposure to periphery spreads into the announcement, with the 10-Year BTP/Bund spread now close to the tight end of its range”.
- At a more granular level, they note that “tariff risks within EMU-11 seem most acute for Germany, Italy, and Ireland while Spain and France seem relatively shielded. This was likely behind the YtD underperformance of IRISH credit, which continued yesterday, despite still-strong fundamentals otherwise. These headwinds are likely to persist for now, although we believe value in the Irish credit is being built for the medium-term”.
FOREX: FX OPTION EXPIRY
Of note:
EURUSD ~1bn at 1.0800.
EURUSD 2.3bn at 1.0800 (thu).
USDJPY 1.19bn at 150.00 (thu).
EURUSD 1.53bn at 1.0800 (fri).
USDCAD 1.19bn at 1.4350 (fri).
AUDUSD ~1bn at 0.6300 (fri).
AUDUSD 1.43bn at 0.6350 (tue).
- EURUSD: 1.0700 (1.11bn), 1.0750 (525mln), 1.0790 (362mln), 1.0800 (972mln).
- USDJPY: 149.80 (278mln), 149.95 (299mln).
- USDCAD: 1.4300 (307mln), 1.4350 (425mln).
- NZDUSD: 0.5775 (427mln).
OPTIONS: Expiries for Apr02 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0790-00(E1.9bln)
- USD/JPY: Y149.80-95($577mln)
- USD/CAD: C$1.3780($1.1bln), C$1.4400-15($924mln)
- USD/CNY: Cny7.3500($1.3bln)
