US TSYS/SUPPLY: Review: 20Y Bond Auction Tails, Weak Bid-Cover

• TYH5 saw 108-23 (+ 05+) at the early close, close to session highs of 108-24+ seen in sustained momentum originating from the WSJ reporting Trump would stop short of imposing new tariffs on day one.
• The contract has lifted a couple ticks on net since shortly prior to Trump’s address, having at one point dipped to 108-18 before swiftly reversing. There was little by way of details behind “we will tariff and tax foreign countries to enrich our citizens” and his speech contained few surprises.
• Resistance is seen at Friday’s high of 108-27+ before 109-06 (Dec 31 high) but gains are deemed corrective from a technical perspective, against a medium-term bear trend with support at 108-00 (Jan 16 low). It earlier saw a low of 108-08+.
• The MLK Day holiday has heavily depressed volumes despite the inauguration, with cumulative TY volumes tracking at only circa 35% of recent averages.
• Fed Funds futures meanwhile have seen cut expectations build today to 40bp for 2025 (again, all after the WSJ report) vs 38bp at the US crossover and 32bp prior to last week’s CPI report. A next 25bp cut from the FOMC is seen around June/July.

• RES 4: 1.0630 High Dec 06
• RES 3: 1.0568 High Dec 10
• RES 2: 1.0463 50-day EMA  
• RES 1: 1.0437 High Jan 6
• PRICE: 1.0399 @ 16:41 GMT Jan 20
• SUP 1: 1.0260/0178 Low Jan 15 / 13 and the bear trigger   
• SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
• SUP 3: 1.0095 2.0% 10-dma envelope
• SUP 4: 1.0031 2.000 proj of the Sep 25 - Oct 23 - Nov 5 price swing    

The trend condition in EURUSD is unchanged, it remains bearish. For now, the latest recovery appears corrective, however, the pair has breached the 20-day EMA, at 1.0338, and pierced trendline resistance at 1.0403, drawn from the Sep 30 ‘24 high. A clear breach of the line would expose the 50-day EMA at 1.0463. Clearance of this average would strengthen a bullish condition. Key support and the bear trigger is at 1.0178, the Jan 13 low.     

• While the US Dollar strengthened moderately during Trump’s speech, the USD index remains around 1% lower on the day. President Trump explained “we will tariff and tax foreign countries to enrich our citizens”, however the lack of details does little to refute the earlier reports that tariffs will not be imminently rolled out, keeping risk elevated and the dollar on the back foot.
• EURUSD reached pullback lows of 1.0354 but has returned near to the 1.0400 mark, while USDJPY remains steady around pre speech levels of 155.80.
• Gains for G10 currencies have remained broad based against the dollar, with the NZD continuing to marginally outperform. There has been some significant volatility for bitcoin, which briefly dipped as much as 8% from earlier session highs of 109,241, and stands around 102,500 at typing.