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EGBs-GILTS: Focus Squarely On ECB


Large 2yr trade


Estoxx fades off initial resistance

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  • In the equity space, sentiment remains bullish. The E-mini S&P (U1) continues to grind higher, confirming once again that the path of least resistance remains up. The focus is on 4264.41, a Fibonacci projection. Further out, the recent break higher also exposes 4300.00. Initial firm support is at 4155.00, Jun 3 low. The broader medium-term trend support is at 4020.00, May 13 low.
  • In the space, EURUSD appears vulnerable. The pair has traded either side of the 1.2111 50-day EMA and has briefly shown below the 1.2104 Jun 4 low. This zone represents a key short-term support and a clear break would signal scope for a deeper sell-off. GBPUSD attention is on the key support that lies 1.4006, May 13 low. The 50-day EMA is just above at 1.4037 and also represents a key support. The outlook is bullish while these levels hold. Recent USDJPY weakness resulted in a probe of support at 109.33, Jun 1 low. The pair has since entered a consolidation phase. A break lower would signal potential for a deeper decline and open 108.56, May 25 low. 110.33, Jun 4 high is the bull trigger.
  • On the commodity front, Gold has probed support at $1856.2, Jun 4 low. A deeper sell-off would open $1841.6, the 50-day EMA. Trend conditions in oil remain bullish and price continues to trend higher. Brent (Q1) gains have seen the price top $73.00, a round number resistance. The focus is on $74.20, Apr 26, 2019 high (cont). WTI (N1) has also traded higher today as the uptrend extends. The focus is on $72.06, 3.00 projection of Mar 23 - 30 - Apr 5 price swing
  • Within FI, Bunds (U1) maintain a bullish tone with the focus on 173.32 next, 76.4% of the Mar 25 - May 19 sell-off. Gilts (U1) cleared 127.74/82 last week, the highs between Apr 20 and May 26. This opens 128.50, 1.00 projection of the May 13 - 26 - Jun 3 price swing.