USDJPY TECHS: Approaching The 20-Day EMA

• RES 4: 1.3175 High Oct 4 2024  
• RES 3: 1.3119 76.4% retracement of the Sep 26 ‘24 - Jan 13 bear leg
• RES 2: 1.3048 High Nov 6 ‘24
• RES 1: 1.3015 High Mar 20 and the bull trigger  
• PRICE: 1.2897 @ 16:45 GMT Mar 26 
• SUP 1: 1.2875 Low Mar 26     
• SUP 2: 1.2869 20-day EMA
• SUP 3: 1.2731 50-day EMA and a short-term pivot support  
• SUP 4: 1.2556 Low Feb 28      

The trend structure in GBPUSD remains bullish and the latest shallow pullback appears corrective. Moving average studies are in a bull-mode position and this highlights a dominant uptrend. A resumption of gains would pave the way for a climb towards 1.3048, the Nov 6 2024 high. Initial firm support to watch is 1.2869, the 20-day EMA. Clearance of this level would signal scope for a deeper retracement towards the 50-day EMA, at 1.2731.                  

• Headlines suggesting that President Trump is preparing a statement on automotive import tariffs for Wednesday afternoon have weighed on major equity indices, in turn boosting the USD index to a three-week high. Specific headlines regarding the EU suggesting that its top trade negotiator expects President Trump to hit the bloc with tariffs of about 20% next week have also dampened sentiment for the single currency.
• As such, EURUSD has slipped further below 1.0800, and is notably tracking below the 20-day exponential moving average for the first time since March 03. This threatens a deeper pullback for the pair, potentially towards more significant support at 1.0631, a key short-term pivot level.
• In similar vein, GBPUSD trades on the backfoot and is below 1.29, however, sterling’s underperformance is mainly due to a softer set of inflation data from the UK, that prompted an early shunt lower for cable. The Spring Statement from Chancellor Reeves had little effect overall, as GBPUSD consolidates 0.42% losses as we approach the APAC crossover.
• Price action narrows the gap to firm support at 1.2869, the 20-day EMA. A sustained clearance of this level would signal scope for a deeper retracement towards the 50-day EMA, at 1.2731.
• AUDJPY remains higher on the session, but the latest equity weakness is helping its key 50-day EMA resistance cap the topside for the cross. Today’s high of 95.19 matched closely with the average, which has proved significant in recent months, having not closed above it since January.
• The firmer dollar theme is trumping the softer sentiment for equities, emphasised by USDJPY rising 0.42% to 150.55. The focus continues to be on 150.95, which represents both the recovery high and the 50-day EMA, a break above which would be the latest counter-trend signal and could signal scope for a stronger rally.
• US final GDP, weekly jobless claims and pending home sales highlight a relatively light economic calendar on Thursday.

Gilt yields resolved lower after volatile trading around the UK government's highly-anticipated fiscal statement, outperforming Bunds in a bull flattening move.

• Core instruments strengthened in early trade, with Gilts benefiting from a softer-than-expected inflation report.
• Gilt yields jumped to session highs on the Spring Statement release, but rebounded sharply after the release of the Gilt Remit showed a slightly lower than expected total (GBP299.2B vs. median GBP303B). The UK curve would close bull flatter.
• Core FI rallied through the cash close, as the White House confirmed President Trump would announce auto tariffs later in the day.
• ECB commentary was mixed but not unexpected given the sources:  dove Centeno said he saw no reason not to cut in April; hawk Holzmann conversely said he wouldn't vote to cut rates in April.
• The German curve bull steepened; periphery EGB spreads closed slightly wider of Bunds following a late risk-off move.
• Thursday's calendar is lighter, with appearances by BoE's Dhingra and multiple ECB officials, Spanish retail sales and ECB monetary aggregates data, and the Norges Bank decision bearing attention. 

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.8bps at 2.119%, 5-Yr is down 1.3bps at 2.414%, 10-Yr is down 0.3bps at 2.795%, and 30-Yr is up 0.6bps at 3.137%.
• UK: The 2-Yr yield is down 1.1bps at 4.29%, 5-Yr is down 1.6bps at 4.37%, 10-Yr is down 2.5bps at 4.728%, and 30-Yr is down 6bps at 5.309%.
• Italian BTP spread up 0.6bps at 110.2bps / Spanish up 0.2bps at 62.5bps