EURUSD TECHS: Uptrend Remains Intact

• RES 4: 1.3550 High Feb 24 ‘22
• RES 3: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
• RES 2: 1.3402/3444 High May 6 / High Apr 28 / 29 and the bull trigger
• RES 1: 1.3323 High May 9   
• PRICE: 1.3198 @ 06:06 BST May 13
• SUP 1: 1.3140 Low May 12   
• SUP 2: 1.3087 50-day EMA
• SUP 3: 1.3041 Low Apr 14  
• SUP 4: 1.2968 Low Apr 11 

GBPUSD traded lower Monday as the pair extended the correction that started Apr 29. The 20-day EMA has been breached. Furthermore, a minor head and shoulders formation on the daily chart highlights a reversal and reinforces the likelihood of a corrective pullback near-term. Key support to watch is 1.3087, the 50-day EMA. The bull trigger is unchanged at 1.3444, the Apr 28 / 29 high. A break of this level would resume the uptrend.

JGB futures are holding sharply weaker and near session lows, -86 compared to settlement levels, despite a solid post-auction rally at the long end of the curve.

• The 30-year JGB auction low price aligned with dealer expectations per a Bloomberg survey. Moreover, the cover ratio rose to 3.0739x from 2.9582x, and the auction tail narrowed significantly to 0.30 from 0.75 (the longest since 2023).
• (MNI, ICYMI) Several Bank of Japan's board members expressed caution about raising interest rates at the April 30-May 1 meeting. The summary did not offer any hint regarding the pace or timing of rate increases, reflecting the board's cautious stance at the meeting, which led to a hold on the 0.5% policy rate.
• BoJ Governor Uchida reiterated the central bank’s stance to raise interest rates once its economic outlook is realised in Parliament today.
• Cash US tsys are 1-2bps richer in today's Asia-Pac session after yesterday's heavy session sparked by news that the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
• Cash JGBs are 1-2bps cheaper across benchmarks out to the 10-year but 7-8bps richer beyond.
• Swap curve has twist-flattened with rates 3bps higher to 5bps lower.
• Tomorrow, the local calendar will see PPI data alongside BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs.

• RES 4: 120.20 High Dec 12 ‘24 (cont)           
• RES 3: 119.960 High Apr 7 and the bull trigger          
• RES 2: 119.600/780 High May 7 / High Apr 22
• RES 1: 118.722/119.068 50- and 20-day EMA values                                     
• PRICE: 118.260 @ 05:44 BST May 13 
• SUP 1: 118.240 Intraday low       
• SUP 2: 118.105 50.0% retracement of the Mar 6 - Apr 7 bull run  
• SUP 3: 117.680 Low Apr 9 and a key support  
• SUP 4: 117.600 Low Mar 28      

A bull cycle in Bobl futures remains intact, however, for now a strong bearish corrective phase is in play and Monday’s sell-off strengthens a near-term bearish theme. The contract has traded through the 50-day EMA and cleared 118.543, 38.2% of the Mar 6 - Apr 7 bull run. This exposes 118.105, the 50.0% retracement. Initial resistance to watch is 119.068, the 20-day EMA. A break would signal a potential reversal.