STIR: BLOCK: Sep'25 SOFR Call Buyer

• RES 4: 159.45 High Jul 12 
• RES 3: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing
• RES 2: 158.08/87 High Jan 15 / 10 and the bull trigger
• RES 1: 156.56 20-day EMA   
• PRICE: 155.44 @ 16:16 GMT Jan 21
• SUP 1: 155.00/154.78 50-day EMA / Intraday low
• SUP 2: 154.32 Trendline support drawn from the Sep 16 ‘24 low
• SUP 3: 153.16 Low Dec 17
• SUP 4: 152.46 Low Dec 13   

The trend condition in USDJPY remains bullish and recent weakness appears corrective - for now. The pair has traded through the 20-day EMA and an extension lower would signal scope for a deeper retracement. Support to watch is 155.00, the 50-day EMA, and 154.32, a trendline drawn from the Sep 16 ‘24 high. A clear breach of both levels would highlight a stronger reversal. Key resistance and the bull trigger is 158.87, the Jan 10 high.      

• RES 4: 0.8545 High Aug 21  
• RES 3: 0.8530 76.4% retracement of the Aug 8 - Dec 19 downleg 
• RES 2: 0.8494 High Aug 26 ‘24
• RES 1: 0.8474 High Jan 20
• PRICE: 0.8454 @ 16:06 GMT Jan 21
• SUP 1: 0.8403/8364 Low Jan 16 / 20-day EMA   
• SUP 2: 0.8341 50-day EMA
• SUP 3: 0.8284 Low Jan 8
• SUP 4: 0.8263 Low Dec 31

A bull cycle in EURGBP remains intact and the cross is holding onto its latest gains. Recent gains undermine a bearish theme and suggest scope for stronger short-term recovery. Resistance points at 0.8376, the Nov 19 high, and 0.8448, the Oct 31 high, have been breached, strengthening the current bullish theme. Sights are on 0.8494 next, the Aug 26 ‘24 high. Support at the 50-day EMA is at 0.8341. 

Eurozone economic activity continues to be mixed at best across sectors and countries. Despite an uptick on an aggregate basis in Q3, mid-term growth momentum is subdued, with low investment and net exports, while household consumption is seen to exhibit some relative strength. The economic outlook for the bloc became more clouded in recent months amid subdued sentiment and expectations for a less favourable global environment going forward.

• Economic Activity: Final GDP growth printed 0.4% Q/Q in Q3, but Q4 is only estimated around the 0.1% handle. Annual growth is seen a little higher in 2025 (1.0%) vs 2024 (0.7%) and 2023 (0.4%), but momentum is uneven across sectors and the main countries.
• Labour Market: The Eurozone labour market continues to show some signs of cooling in recent months but remains overall resilient. Wage pressures continued to moderate recently.
• Monetary Policy: The ECB appears confident on being able to gradually cut its interest rates down to neutral territory with markets expecting 100bps of cuts in 2025.

PDF ANALYSIS HERE: 

2025_Jan21_Eurozone_Macro_Signal.pdf