EURGBP TECHS: Bearish Threat

Mar-25 06:31
  • RES 4: 0.8498/8535 High Dec 23 / 2.0% 10-dma envelope
  • RES 3: 0.8478 High Feb 7 and a bull trigger
  • RES 2: 0.8458 High Mar 17
  • RES 1: 0.8374 High Mar 22
  • PRICE: 0.8346 @ 06:30 GMT Mar 25
  • SUP 1: 0.8296 Low Mar 23
  • SUP 2: 0.8278 Low Mar 7
  • SUP 3: 0.8203 Low Mar 7 and the bear trigger
  • SUP 4: 0.8131 Low Jun 27, 2016

Weakness in EURGBP this week threatens the recent bullish theme and has exposed support at 0.8278, Mar 7 low. A break of this level would highlight a stronger bearish reversal and exposes key short-term support at 0.8203, Mar 7 low. The cross is also once again trading below both the 20- and 50-day EMAs - a bearish development. For bulls, a recovery would refocus attention on 0.8458, Mar 17 high and a bull trigger.

Historical bullets

EURGBP TECHS: Watching Support

Feb-23 06:27
  • RES 4: 0.8512 High Dec 22
  • RES 3: 0.8480 61.8% retracement of the Dec 8 - Feb 3 downleg
  • RES 2: 0.8432/78 High Feb 11 / High Feb 7
  • RES 1: 0.8383/8403 High Feb 22 / High Feb 16
  • PRICE: 0.8333 @ 06:25 GMT Feb 23
  • SUP 1: 0.8311/8285 Low Feb 22 / Feb 3 and key support
  • SUP 2: 0.8282/77 Low Feb’20 / Dec’19 and key bear trigger
  • SUP 3: 0.8242 50% Fibonacci Retracement 2015-2020 Upleg
  • SUP 4: 0.8238 0.764 proj of the Dec 8 - Feb 3 - 7 Price swing

EURGBP reversed a mid-session rally Tuesday ahead of the close, keeping the cross in close proximity to its recent lows. Recent price action though has kept key support at 0.8285 intact, Feb 3 low, and if prices can hold above this level, it would suggest the recent move lower has been a correction. The next resistance to watch is at 0.8403, the Feb 16 high. Initial support is at Tuesday’s 0.8311.

US TSYS: Limited Asia Trade, Cash Closed On Japanese Hol

Feb-23 06:24

TYH2 stuck to a narrow 0-06 overnight, hampered by the closure of cash Tsy trade, owing to the observance of a Japanese holiday. The contract last deals unch. at 126-15. Gyrations in the ACGB space (with movements linked perceptions surrounding the RBA, in addition to a hawkish RBNZ decision) provided some lead for Tsys, but a lack of meaningful macro headline flow made for a contained session. The space looked through the cancellation of Thursday’s Blinken-Lavrov meeting, while the White House took a Biden-Putin meeting off the table (until there is a de-escalation re: Ukraine).

  • Tuesday’s early risk-off impulse, stemming from Russia’s recognition of the LPR & DPR separatist regions in Ukraine, coupled with the official announcement of a Russian “peacekeeping” mission in the separatist states, faded as we moved through Tuesday trade. The lack of hardline western sanctions on Russia (at least for now) seemingly allowed markets to breathe a sigh of relief. The cash Tsy curve bear flattened on Tuesday, with 2s running ~8.5bp cheaper on the day, while 30s were little changed come the bell. Some of the Fed rate hike premium returned to the market, which aided the cheapening in the front end of the curve, allowing the 2-/10-Year yield spread to move to fresh cycle lows. The weakness in the front end allowed 2-Year Tsy supply to stop through WI by 0.6bp, with the cover ratio moderating a touch vs. the prev. auction, but that metric remained above the recent auction averages. Dealer takedown slid to the lowest level on record (for a 2-Year auction). Fedspeak from Bostic (’24 voter) failed to add anything in the way of new information.
  • Fedspeak from Daly & 5-Year Tsy supply headline the NY docket on Wednesday.

UK: Timeline of key events (Times GMT)

Feb-23 06:23
Date Time Period Event
23-Feb 0930 ---- BOE Governor Bailey et al at TSC
23-Feb 1500 ---- BOE Tenreyro speaks at NIESR Institute lecture
24-Feb 1100 Feb CBI Distributive Trades
24-Feb 1315 ---- BOE Bailey Intro at BEAR Research Conference
24-Feb 1600 ---- BOE Broadbent moderates panel at BEAR Conference on QE
25-Feb 0001 Feb Gfk Monthly Consumer Confidence
25-Feb 1800 ---- BOE Pill closing BEAR Conference, remarks on Unwinding QE
01-Mar 0730 ---- DMO Gilt Operations Announcement W/C 4/11 April
01-Mar 0930 Jan BOE M4
01-Mar 1900 ---- BOE Mann panels Cleveland Fed discussion
02-Mar 0001 Feb BRC Monthly Shop Price Index
02-Mar 1830 ---- BOE Tenreyro speech to Economic Research Council
02-Mar 2000 ---- BOE Cunliffe speech at Oxford Union
04-Mar 0930 Feb IHS Markit/CIPS Services/Construction PMI