ECB: Vujcic Sees March and April As Key, Especially For Services Inflation

• Latest Block crossed at 0724:55ET:
  • +2,500 TUH5 102-22.12, post time offer vs.
  • -3,000 TYH5 107-30, through 107-30.5 post time bid
• The 2s10s curve has climbed to 41.621 this morning, highest since May 16, 2022

• Despite the underlying dollar bid, the underperformance for UK assets has prompted a solid uptick for EURGBP on Wednesday, and a firm break above resistance at 0.8311, the 50-day EMA.
• We have reached a high of 0.8348 so far, and this represents a six-week high for the cross. Price action today undermines the dominant bear theme and highlights the potential a stronger reversal. Further weakness below the 2024 highs in cable would likely add to the topside momentum in EURGBP.
• Above here, the focus will be on 0.8376, the Nov 19 high and technical bull trigger. 

• RES 4: 137.75 Low Dec 10            
• RES 3: 135.15 High Dec 13 
• RES 2: 133.90 20-day EMA
• RES 1: 132.57/133.48 High Jan 6 / 3                
• PRICE: 131.55 12:27 GMT Jan 8
• SUP 1: 131.50 Intraday low     
• SUP 2  131.28 Low Nov 14 ‘24 (cont)               
• SUP 3: 131.00 Round number support 
• SUP 4: 130.58 Low Nov 6 ‘24 and a key support      

The trend cycle in Bund futures remains bearish and this week’s extension reinforces this theme. The contract has breached key support at 132.00, the Nov 6 low. A clear break of this level strengthens a bearish theme. Sights are on a move towards 131.28 next, the Nov 14 low on the continuation chart. Initial resistance is at 132.57, the Jan 6 high. Key short-term resistance is at 133.90, the 20-day EMA.