US10Y Technicals – Approaching 132.0 as fear grips market

February 22, 2013 Share Print 0

Fear is getting back in the market with more and more depressing news coming in. Last night’s Initial Jobless claims came in at 362K, slightly more than estimated 355K but 20K more than previous week. Philly Fed data also point to immense fall in manufacturing activities with the index coming in at -12.5 vs previous month’s -5.8. Analysts were looking out for a slight gain at 1.0. Leading indicators show that growth is slowing down, with a growth of 0.2% compared to previous month’s 0.5%. All these are icing to the depressing cake that the Fed has dished out to us in its latest minutes on Wednesday.

Daily Chart

10Y T-Notes are edging towards retaking 132.0 level once more, after the foiled attempt yesterday. A break above 132 will stop the current step-like decline and usher in a slow-down of bearish momentum at the minimum. If price manage to stay above 132.0 for an extended period of them, we will be forced to consider the possibility of a test back to 132.50, which will signal a bullish reversal with price breaking above the Kumo and also forging a higher high in the meantime. That being said, the timeframe we are looking here will not be immediate, but closer to 1-2 weeks based on current Kumo’s distance.

EUR/USD Daily Chart

The ability of EUR/USD to break below current Kumo will also be largely dependent on how Risk Appetite behaves from here. Should fear continue to grip, expect USD to strengthen against “risk currencies” like EUR, AUD, NZD and we should be seeing EUR/USD trading below 1.32 to usher in a bearish bias on the daily chart.

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