EURGBP TECHS: Unwinding An Oversold Trend Condition

Jun-22 18:00
  • RES 4: 0.8768 High May 5
  • RES 3: 0.8719 High May 23
  • RES 2: 0.8666 50-day EMA
  • RES 1: 0.8636 High Jun 5
  • PRICE: 0.8602 @ 16:25 BST Jun 22
  • SUP 1: 0.8518 Low Jun 19 and the bear trigger
  • SUP 2: 0.8477 1.0% 10-dma envelope
  • SUP 3: 0.8454 76.4% retracement of the Mar - Sep 2022 bull cycle
  • SUP 4: 0.8408 Low Aug 24 2023

The primary trend direction in EURGBP remains down, however, a corrective cycle has resulted in a recovery from recent lows. This is allowing a recent oversold condition to unwind. Resistance at the 20-day EMA has been breached. A continuation higher would expose the 50-day EMA at 0.8666. The medium-term trend outlook remains bearish and a break of 0.8518, the Jun 19 low, would confirm a resumption of the trend.

Historical bullets

EURGBP TECHS: Bear Flag

May-23 18:00
  • RES 4: 0.8875 High Apr 25 and key short-term resistance
  • RES 3: 0.8835 High May 3
  • RES 2: 0.8767 50-day EMA
  • RES 1: 0.8729 20-day EMA
  • PRICE: 0.8677 @ 15:53 BST May 23
  • SUP 1: 0.8661 Low May 11
  • SUP 2: 0.8649 76.4% retracement of the Dec 1 - Feb 3 bull run
  • SUP 3: 0.8593 Low Dec 15 2022
  • SUP 4: 0.8562 Low Dec 13 2022

EURGBP slipped through the London close, narrowing the gap with first support at Friday’s 0.8668. The trend condition is bearish and the latest pause appears to be a bear flag. The recent breach of 0.8719, Mar 15 low, confirmed a resumption of the bear cycle and this has opened 0.8649, a Fibonacci retracement. Initial firm resistance is at 0.8729 the 20-day EMA. The 50-day EMA intersects at 0.8767 where a clear break is required to signal a reversal.

ECB: Nagel Maintains Hawkish Tone

May-23 17:57
  • *NAGEL: ECB RATES TO STAY RESTRICTIVE FOR SUFFICIENTLY LONG TIME – bbg
  • *ECB’S NAGEL SAYS ‘SEVERAL’ INTEREST-RATE HIKES STILL NEEDED - bbg



  • Speaking in Berlin, Bundesbank’s Nagel says “The course of monetary policy tightening has not yet come to an end,”… “Several rate hikes will still be necessary to reach a sufficiently restrictive level. And we will then have to maintain this level for a sufficiently long time. Until inflation has come down.”
  • The tone reiterates May 12 comments that more ECB rate hikes look necessary and tightening might be required after the summer break, with subsequently little immediate reaction in EURUSD (holding -0.3% at 1.0777 off earlier session lows of 1.076 for joint lows with May 19 and initial support).

PIPELINE: $2B Lockheed Martin 3Pt Launched

May-23 17:54
  • Date $MM Issuer (Priced *, Launch #)
  • 05/23 $2B #Lockheed Martin $500M 5Y +75, $850M +10Y +110, $650M +30Y +130
  • 05/23 $1B NWB (Netherlands Bank) WNG 5Y SOFR+45
  • 05/23 $1B Seagate HDD Cayman 6.5NC3, 8NC3
  • 05/23 $500M *Tokyo Metro Gov 3Y SOFR+84
  • 05/23 $500M *Ameren Illinois WNG 10Y +127
  • 05/23 $Benchmark John Deere filed prospectus to issue $36B in medium-term notes, details over timing and individual size TBA. If JD does issue $36B at one offering, would be new fourth largest on record, $5B larger than last week's 8-tranche jumbo issued by Pfizer.
  • Rolled to Wednesday's order of business:
  • 05/23 $Benchmark KFW 5Y SOFR+36a