AUDUSD TECHS: Trend Needle Points North
- RES 4: 0.6956 High Aug 30
- RES 3: 0.6909 76.4% retracement of the Aug 11 - Oct 13 downleg
- RES 2: 0.6800 Round number resistance
- RES 1: 0.6797 High Nov 15 and the bull trigger
- PRICE: 0.6749 @ 15:57 GMT Nov 25
- SUP 1: 0.6634/6585 Low Nov 23 / 21
- SUP 2: 0.6576 50-day EMA
- SUP 3: 0.6387 Low Nov 10
- SUP 4: 0.6272 Low Nov 3 and a key support
The AUDUSD trend condition remains bullish and this week’s recovery reinforces this theme. Firm support lies at 0.6576, the 50-day EMA. A clear break of the average would be seen as a bearish development and signal scope for a deeper retracement. On the upside, a continuation higher and a break of 0.6797, the Nov 15 high, would resume the uptrend and open the 0.6800 handle.
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USDCAD TECHS: Bears Watch The Close Below 20-Day EMA
- RES 4: 1.4040 76.4% retracement of the 2020 - 2021 bear cycle
- RES 3: 1.4016 3.382 proj of the Aug 25 - Sep 7 - 13 price swing
- RES 2: 1.4000 Psychological round number
- RES 1: 1.3855/3977 High Oct 21 / 13 and the bull trigger
- PRICE: 1.3562 @ 15:58 BST Oct 26
- SUP 1: 1.3508 Low Oct 26
- SUP 2: 1.3503 Low Oct 4 and a key support
- SUP 3: 1.3448 50-day EMA
- SUP 4: 1.3358 Low Sep 21
USDCAD pierced the 20-day EMA support Tuesday, and is extending losses. Tuesday’s close is a bearish development and works against the broader uptrend. For now, the recovery from 1.3503, Oct 10 high, is reinforcing bullish conditions. Moving average studies also highlight an uptrend and 1.3838, Sep 30 high has been cleared. A clear break and close below the 20-day EMA would suggest scope for a pullback towards 1.3503, Oct 4 low.
US TSYS: Hawks Eat Crow After BOC Hikes Less Than Expected
Tsys holding strong gains after the close. Tsys had gapped to new session highs early Wed after the BOC hiked less than expected: 50bp to 3.75% vs. 75bp to 4.0% as "hikes beginning to weigh on growth" BOC Gov Macklem. Tsy yields were already extending lows as softer data cools expectations of more hawkish year end policy expectations - before 30YY fell to 4.1401% low on the annc.
- Tsy futures scaled back support slightly in the minutes post-BOC, see-sawed near highs amid debate over exogenous factor will really have on influencing the Fed's policy making over the next two meetings.
- Despite a 0.075 rally to 94.98 in Dec Eurodollar futures, expectations of a 75bp hike on Nov 2 remains intact, chances of another 75bp in Dec continue to cool.
- While last Fri's WSJ/Timiraos + Fed Daly comments over hiking too much have helped take the pressure off year end expectations, some pundits see risks swinging back towards hawkish again as Fed Chairman Powell likely to push back on less hawkish rate hike optimism and reiterate Sep messaging/DOT plot guidance.
- Reminder, the next employment report (covering October) is on November 4 - after the FOMC. An in-line read will likely tip the scales back toward 75bp hike in Dec.
EURJPY TECHS: Holding On To Monday’s Gains
- RES 4: 149.46 1.382 proj of the May 12 - Jun 28 - Aug 2 price swing
- RES 3: 148.88 High Dec 9 2014
- RES 2: 148.40/45 High Oct 21 and the bull trigger / High Dec 15 2014
- RES 1: 147.73 High Oct 25
- PRICE: 147.25 @ 15:48 BST Oct 26
- SUP 1: 145.64 / 143.80 High Sep 12 / Low Oct 24 and key support
- SUP 2: 141.99 50-day EMA
- SUP 3: 140.90 Low Oct 10
- SUP 4: 139.44/137.40 Low Sep 29 / 26 and key support
The EURJPY uptrend remains intact and the latest sharp pullback appears to be a correction. The cross has found strong support below 144.18, the 20-day EMA and key support has been defined at 143.80, Monday’s low. A continuation higher would open last Friday’s high of 148.40. This is the bull trigger and a break would confirm a resumption of the uptrend. Moving average studies continue to highlight a bullish backdrop.
