US 10YR FUTURE TECHS: (U5) Reversal Extends
- RES 4: 112-04+ High May 2
- RES 3: 111-30 76.4% retracement of the May 1 - 22 downleg
- RES 2: 111-19+ 1.0% 10-dma envelope
- RES 1: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
- PRICE: 110-06 @ 14:27 BST Jun 6
- SUP 1: 109-26 Low May 29
- SUP 2: 109-12+ Low May 22 and the bear trigger
- SUP 3: 109-09+ Low Apr 11 and key support
- SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing
Treasury futures are trading sharply lower today, extending the reversal from Thursday’s high. The move down does undermine a recent bullish theme. An extension would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and Thursday’s high. A break of this hurdle would be bullish.
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RATES: Bank Of America Hold Hawkish Stance In U.S. Rates
Bank of America believe that “US rates are well priced for bad news, good news seems underpriced”. They see “scope for higher rates near-term as the market better balances risks to the outlook with a wait-&-see Fed”.
- As a result, they “recommend paying the U.S. front end (June FOMC OIS), remaining patient on initiating any belly longs & are underweight the back end (via short 30-Year asset swaps)”.
FOREX: EURUSD Rangebound Ahead Of FOMC, 20-Day Support Remains Key
- EURUSD trades within yesterday's range as headlines on US-China trade talks, additional China stock market support and notably strong German March factory orders were not able to materially impact the pair ahead of the FOMC this evening.
- Following the likely rates hold, Chair Powell is expected to warn about the risks to both sides of the dual mandate in the press conference. Any signal that the Fed is looking seriously at “soft” survey data to assess the outlook could be significant.
- The 20-day EMA remains key on the chart, supporting the pair extremely well since the break higher in early March. Indeed, the lows across May so far have continued to respect the average, which now intersects at 1.1279. A break would signal scope for a deeper pullback, initially looking for 1.1144, the April 03 high. Initial resistance is seen at 1.1440 (Apr 23 high), before the bull trigger which remains at 1.1573.
- Following chancellor Merz needing two attempts for election in the Bundestag, BBVA think "political noise and instability in Germany could weigh on one of the important upward drivers of the EUR going forward".
- Rabobank expect upside in EUR/USD on a 12-month view to be fairly moderate and see potential for short-covering in favour of the dollar in Q2, which could lead to dips to 1.12 on a 1-month view.
MNI EXCLUSIVE: Implications of Weekend Talks Between US-China
Chinese policy advisors look at the implications of weekend talks with the U.S. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
