USD: Bessent's View on USD Correction May Endorse Further Weakness

Note for clarity on the implementation of US steel and aluminium tariffs, discussed in today’s edition of the US Daily Brief. 

• President Donald Trump has adjusted the tariff rate on steel and aluminium products imported into the United States. For practical considerations, the key date for implementation is March 12, 2025, when “all imports of steel articles and derivative steel articles from Argentina, Australia, Brazil, Canada, EU countries, Japan, Mexico, South Korea, and the United Kingdom shall be subject,” to the same tariff rate as most of the rest of the world.
• The proclamation brings allies and partners of the United States into compliance with a similar tariff rate currently levied on Chinese steel and aluminium imports.
• The executive proclamation can be read here.
• A White House fact sheet can be read here.

• RES 4: 110-25   High Dec 12
• RES 3: 110-19   76.4% retracement of the Dec 6  - Jan 13 bear leg    
• RES 2: 110-14   High Dec 14
• RES 1: 110-00   High Feb 7
• PRICE:‌‌ 108-30 @ 14:13 GMT Feb 11
• SUP 1: 108-20+ Low Feb 4   
• SUP 2: 108-06/107-06 Low Jan 23 / 13 and the bear trigger 
• SUP 3: 107-04   Low Apr 25 ‘24 and a key support 
• SUP 4: 106-11   2.00 proj of the Oct 1 - 14 - 16 price swing  

A bull phase in Treasury futures remains in play despite the run lower off recent highs. This leaves the contract holding the bulk of its latest gains. Price has traded through the 50-day EMA of 109-10+. This highlights potential for a stronger reversal and sights are on a climb above the 110-00 handle. On the downside, initial firm support to watch is unchanged at 108-20+, the Feb 4 low. Clearance of it would signal a reversal and the end of the corrective cycle.

Tsy quarterly futures roll from March'25 to June'25 is still early in the process, but 5s have been leading volumes so far this week. Percentage complete remains low, less than 2% across the curve ahead the "First Notice" date on February 28. Current roll details:

• TUH5/TUM5 appr 2,200 from -5.88 to -5.5, -5.5 last
• FVH5/FVM5 appr 78,100 from -3.0 to -2.25, -2.5 last
• TYH5/TYM5 appr 14,100 from 0.25 to +0.5, +0.5 last
• UXYH5/UXYM5 less than 200 from 4.25 to 4.5, 4.5 last
• USH5/USM5 less than 100 from 5.75 to 6.25, 6.0 last
• WNH5/WNM5 less than 100 from 3.5 to 4.5, 4.25 last
• Reminder, March futures won't expire until next month: 10s, 30s and Ultras on March 20, 2s and 5s on March 31. March Tsy options expire February 21.