FOREX: USD Subject to Further Vol Triggers Friday
Currency volumes and intraday vol are still reaching new highs, with one-week realised EUR vols clearing to the highest level since 2022 today, and USD/JPY the highest since BoJ intervention.
There remain two key risks to currency markets at this juncture: a further leg lower for global equity sentiment, or a rebounding dollar.
- Firstly, the Russell 2000 Index closed over 20% below the late '24 high yesterday, thereby entering a bear market - the Stoxx 600 is only 11% off the recent high - meaning a catch-down in European stocks could further undermine sentiment.
- Secondly, the USD Index has bounced off lows, recovering as much as 1.4% at some points Friday. The drivers for a potential extension of this rally could lie in both today's NFP print as well as the appearance from Fed's Powell at 1625ET/1115ET (text to be released, with a Q&A). Should the Fed Chair stress the importance of the inflation mandate over-and-above unpredictable near-term growth pressures, the USD could be squeezed higher still, and provide the next trigger for intraday vols.
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EGB OPTIONS: Expiries for Mar05 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0300-20(E1.7bln), $1.0325-35(E1.1bln), $1.0430-50(E1.3bln), $1.0500-05(E746mln)
- USD/JPY: Y147.90-00($702mln), Y148.50($505mln), Y149.00($720mln), Y151.00-10($1.0bln), Y151.85-00($1.0bln)
- EUR/JPY: Y161.75(E1.2bln)
- GBP/USD: $1.2500-20(Gbp1.1bln)
- AUD/USD: $0.6350(A$1.3bln)
- USD/CAD: C$1.4475-80(C$1.2bln), $1.4495-00($1.9bln), C$1.4560($636mln)
- USD/CNY: Cny7.3265($600mln)
US 10YR FUTURE TECHS: (M5) Overbought But Remains Bullish
- RES 4: 112-23+1.618 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 3: 112-18 2.0% 10-dma envelope
- RES 2: 112-13 1.500 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 1: 112-01/02 High Mar 4 / 1.382 proj of Jan 13-Feb 7-12 swing
- PRICE: 111-00 @ 11:10 GMT Mar 5
- SUP 1: 110-23/110-00 Low Feb 28 / High Feb 7
- SUP 2: 109-21 50-day EMA and a key near-term support
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 and a bear trigger
Treasury futures traded to a fresh cycle high Tuesday, reinforcing current bullish conditions. The contract has pierced resistance at 111-22+, Dec 3 ‘24 high. A clear break of this level would strengthen a bullish theme and open 112-02 and 112-13, Fibonacci projection points. Note that the daily trend condition is overbought, a pullback would be considered corrective and allow the overbought set-up to unwind. Firm support is at 110-00, the Feb 7 high.
