Price action over the past few days suggests that equities remain a “sell on rallies”, and the cross-asset implications of this are becoming more apparent. The USD caught a strong bid and EUR/USD dropped below its daily cloud for the first time this year, warning of a deeper pullback. This is occurring despite US 2y yields posting fresh lows for the year.
Two other currency pairs are a concern for risk appetite: GBP/USD and CHF/SEK. Cable is pushing lower in range, and along with gilts approaching their 2010 peaks, we are monitoring neckline support near 1.6100 for the pound. For CHF/SEK, the sharp break higher is consistent with the corrective and persistent weakening equity market signals that have been posted since early May.
BARCLAYS CAPITAL
TECHNICAL RESEARCH