Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank Group
EURUSD has broken below key support at around 1.0725 and is on course to test the next support at around 1.0665. A close below is likely to send EURUSD back down to April lows around 1.06.
Negative sentiment on RSI is supporting the bearish move, and EURUSD is required to close back above 1.0750 to demolish this.
Medium-term: From the weekly chart, we can see how EURUSD tried to get back above the lower rising trendline in the triangle-like pattern only to be rejected, and the downtrend seems to be resuming.
If EURUSD breaks below 1.06, a bearish trend has been established with potential down to 1.05–1.0450.
EURGBP is breaking the key support at 0.84. A daily close below is likely to push the pair lower to support at around 0.8345. A close below that level and EURGBP is looking at 0.8230–0.82 medium-term - see weekly chart.
Negative RSI sentiment on both daily and weekly charts is supporting the bearish scenario, i.e., massive sterling strengthening against the euro.
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