EURGBP TECHS: Adds to Recent Strength
- RES 4: 0.9097 76.4% Retracement of the Sep 26 - Dec 1 bear leg
- RES 3: 0.9047 2.0% 10-dma envelope
- RES 2: 0.8992 61.8% Retracement of the Sep 26 - Dec 1 bear leg
- RES 1: 0.8979 High Feb 3 and the bull trigger
- PRICE: 0.8884 @ 16:20 GMT Feb 17
- SUP 1: 0.8804 Low Feb 14
- SUP 2: 0.8798 50-day EMA
- SUP 3: 0.8762 Low Jan 30
- SUP 4: 0.8722 Low Jan 19 and a reversal trigger
EURGBP trend conditions remain bullish, with prices reverting higher on the back of the UK CPI release earlier this week. Wednesday saw the first higher close in eight sessions for the cross, helping partially reverse a large part of the modest pullback. The recent clearance of 0.8897, the Jan 13 high, confirmed a resumption of the uptrend that started early December and sights are on 0.8992, a Fibonacci retracement. Moving average studies remain in a bull-mode position, highlighting an uptrend. First support to watch lies at 0.8798, the 50-day EMA.
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EURGBP TECHS: Pierces The 50-Day EMA
- RES 4: 0.8992 61.8% Retracement of the Sep 26 - Dec 1 bear leg
- RES 3: 0.8980 High Sep 29
- RES 2: 0.8907 50.0% retracement of the Sep 26 - Dec 1 bear leg
- RES 1: 0.8897 High Jan 13 and the bull trigger
- PRICE: 0.8754 @ 16:46 GMT Jan 18
- SUP 1: 0.8735 Low Jan 18
- SUP 2: 0.8691 Low Dec 19
- SUP 3: 0.8646 High Dec 8
- SUP 4: 0.8593 Low Dec 15
EURGBP traded lower Wednesday, extending Tuesday’s bearish session. The cross has traded below the 50-day EMA, at 0.8756. This represents a key short-term support and a clear break of it would undermine the recent bull phase and signal scope for a deeper retracement. This would open 0.8691 initially, the Dec 19 low. On the upside, key short-term resistance has been defined at 0.8897, the Jan 13 high.
CANADA: Further Solid Rates Rally Ahead Of Next Week’s BoC Decision
- BAX implied yields have pushed lower again although remain off post data lows.
- Those lows were most likely driven by softer US data but had a helping hand from an energy-led slowdown in Canadian industrial and raw material inflation.
- OIS easing to price nearer 20bps of hikes for next week’s BoC decision is also reflected by the front Mar’23 yield trading 3.5bps lower, sliding out to 13bps for the Jun’24 as inversion continues to set new limits with BAH3/Z3 at -0.895 and BAZ3/M4 breaching 100bps at -1.055.
- With implied yields now down 11bps for the Dec’23 and almost 40bps for the Jun’24 since the Dec 7 decision, it could increase the odds of relatively more hawkish guidance in the following press conference.
US: FED Reverse Repo Operation
NY Fed reverse repo usage rebounds to $2,131.678B w/ 103 counterparties vs. prior session's $2.093.328B. Compares to Friday, Dec 30 record/year-end high of $2,553.716B (prior record high was $2,425.910B on Friday, September 30.
NY Federal Reserve/MNI
