FOREX: USD Recovery Picks Up, Despite JPY Bounce

Option desks reported mixed SOFR and Treasury flow Tuesday, leaning toward calls even as underlying futures look to finish lower/near lows. Projected rate cuts recede slightly from pre-open (*) levels: Sep'25 at -27.2bp (-27bp), Oct'25 at -45.9bp (-47.3bp), Dec'25 at -67.9bp (-69.2bp), Jan'26 at -79.9bp (-82.3bp).

• SOFR Options:
  • -4,000 SFRH7 96.00/98.00 risk rev w/ SFRM7 96.12/98.12 risk rev, both call over 1 total
  • 3,000 96.25/96.37/96.50/96.62 call condors ref 96.36
  • Block, 6,500 SFRZ5 96.62/96.75 call spds 1.75
  • +2,500 SFRM6/SFRU6 97.50/98.25 call spd strip, 18.5
  • 2,000 SFRZ5 96.37/96.43/96.50 call flys ref 96.355
  • 2,000 SFRZ5 96.25/96.37 call spds ref 96.38
  • 2,850 SFRU5 96.00/96.06/96.18/96.25 call condors, ref 95.985
  • +5,000 SFRU5 96.00/96.12 call spds, 1.5
  • +2,500 SFRZ5 95.81/95.93 put spds, 0.5 vs. 96.35/0.05%
  • +5,000 SFRZ5 96.50/96.62/96.75/96.87 call condors, 1.5
  • +10,000 SFRU5 95.93/96.00/96.06 call flys, 2.75
  • 2,000 SFRU5 95.87/96.00/96.12 iron flys, 4.0 ref 95.99
  • Block, +5,000 SFRU5 95.87/95.93/96.00 call flys, 2
  • Block, +2,500 SFRU5 96.00/96.12 call spds, 1.25
  • Block/screen, +4,000 SFRZ5 96.50/96.62/96.75/96.87 call condors, 1.5
  • +6,000 SFRZ5 96.00/96.12 put spds, 1.75
  • -2,000 0QU5 97.00/97.50 call spd vs. 2QU5 97.00/97.37 call spds, 2.0 net
  • +5,000 SFRU5 96.00 calls, 1.75
• Treasury Options:
  • 2,400 TUV5 104.75/105 1x2 call spds ref 104-14.25
  • 2,400 FVZ5 110 calls ref 109-29.25
  • 2,500 FVV5 109.75 puts, 17.5 ref 109-28.25
  • 5,000 TUV5 104.25/104.5 call spds ref 104-14.88
  • 5,000 TYV5 113.5/114 call spds ref 113-13
  • +2,000 TYV5 111.75/112.75 put spds 13 vs. 113-08.5/0.08%
  • +1,500 TYV 112/113 put spds, 15 vs. 113-16.5/0.23%
  • +1,500 TUH6 104.62/105.25 call spds, 13.5 vs. 104-14.75/0.20%

• RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing 
• RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
• RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 1: 173.97 High Jul 28 and the bull trigger 
• PRICE: 172.65 @ 17:35 BST Sep 9
• SUP 1: 171.15 50-day EMA
• SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
• SUP 3: 168.46 Low Jul 1  
• SUP 4: 167.46 Low Jun 23   

The trend set-up in EURJPY remains bullish and sights are on key resistance and the bull trigger at 173.97, the Jul 28 high. Clearance of this level would confirm a continuation of the bull phase. Note that moving average studies are in a bull-mode position too, highlighting a primary uptrend. A break of 173.97 would open 174.86, a Fibonacci projection. Key support to watch lies at the 50-day EMA at 171.15.  

• RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing 
• RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
• RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 1: 173.97 High Jul 28 and the bull trigger 
• PRICE: 172.64 @ 17:35 BST Sep 9
• SUP 1: 171.15 50-day EMA
• SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
• SUP 3: 168.46 Low Jul 1  
• SUP 4: 167.46 Low Jun 23   

The trend set-up in EURJPY remains bullish and sights are on key resistance and the bull trigger at 173.97, the Jul 28 high. Clearance of this level would confirm a continuation of the bull phase. Note that moving average studies are in a bull-mode position too, highlighting a primary uptrend. A break of 173.97 would open 174.86, a Fibonacci projection. Key support to watch lies at the 50-day EMA at 171.15.