FED: Warsh - Smaller Fed Balance Sheet Would Help Economy

• RES 4: 1.1276 High Jul 18 ‘23 
• RES 3: 1.1214 High Sep 25 2024 and a key resistance 
• RES 2: 1.1188 0.764 proj of the Feb 28 - Mar 18 - 27 price swing  
• RES 1: 1.1144 High Oct 1 2024 / High Apr 3 and the bull trigger     
• PRICE: 1.1048 @ 15:35 BST Apr 9
• SUP 1: 1.0882 Low Apr 7     
• SUP 2: 1.0844 20-day EMA     
• SUP 3: 1.0733 Low Mar 27 and a key short-term support     
• SUP 4: 1.0713 50-day EMA and a short-term pivot level

The trend condition in EURUSD is bullish and the latest pullback is considered corrective. Key resistance at 1.0955, Mar 18 high, was breached last week, confirming a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. Sights are on 1.1188 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 1.0844, the 20-day EMA.    

Barkin on DOGE effects (with his district most impacted):

• Nationally the federal govt workforce is about 2% but in DC it’s ~25%. There’s a lot of worry of job losses going on.
• Some knock-on impacts: retail spending way down, commercial real estate was expected to rebound significantly but now concern on the other side about leases being canceled.
• Knock-on effect of additional sectors: federal spending roughly 90% checks written to state and local governments, universities, hospitals, contractors etc. There’s a lot of fear in the non-profit and university communities. It’s a little different in the contractor community, with some hit harder than others. From a local geography angle it feels a lot like Texas in the 80s and the Rust Belt in the 90s.

Wednesday's Europe rates/bond options flow included:

• OEK5 118/117ps, sold at 13 in 9k
• RXK5 132/133 call spread, bought for 25 in 12k
• RXM5 129.5/127.5ps 1x2, bought for 7 in 2k
• ERM5 98.125c, bought for 4.5 in 17k
• ERU5 98.25/98.50/98.75c fly, bought for 3.75 in 8k
• 0RM5 98.125/97.9375ps, sold at 5.5 down to 5.25 in 10k