BTP TECHS: (H5) Bull Cycle Remains In Play
- RES 4: 122.85 High Dec 12
- RES 3: 121.88 76.4% retracement of the Dec 11 - Jan 13 bear leg
- RES 2: 120.98/121.00 61.8% of Dec 11 - Jan 13 bear leg / High Feb 7
- RES 1: 120.52 High Feb 26
- PRICE: 120.42 @ Close Feb 26
- SUP 1: 118.95 Low Feb 19
- SUP 2: 118.65/117.16 Low Jan 24 / 13 and the bear trigger
- SUP 3: 116.59 76.4% retrace of the Jun - Dec ‘24 bull cycle (cont)
- SUP 4: 116.07 Low Jul 8 ‘24 (cont)
A bull cycle in BTP futures remains intact and the latest pullback appears to have been a correction. Attention is on 120.98 (recently pierced) and 121.88, Fibonacci retracement points. On the downside, key support to watch lies at 118.65, the Jan 24 low. Clearance of this price point would instead highlight a reversal and the end of the current bull cycle. Initial firm support lies at 118.95, the Feb 19 low.
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EURJPY TECHS: Bullish Outlook
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 and a key short-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 164.08 High Jan 24
- PRICE: 162.60 @ 06:52 GMT Jan 28
- SUP 1: 160.96/159.73 Low Jan 21 / 17 and key short-term support
- SUP 2: 159.51 61.8% retracement of the Dec 3 - 30 bull cycle
- SUP 3: 158.67 Low Dec 11
- SUP 4: 158.24 76.4% retracement of the Dec 3 - 30 bull cycle
Despite the latest pullback, EURJPY is trading closer to last week’s highs. Recent gains resulted in breach of 162.89, the Jan 15 high. This undermines a recent bearish theme and highlights scope for an extension higher near term, towards key resistance at 164.90, the Dec 30 high. Key short-term support has been defined at 159.73, the Jan 17 low. A reversal lower and a break of this level would reinstate the recent bearish threat.
EUROZONE ISSUANCE: EGB Supply
Austria has announced it will hold a syndication, whilst the Netherlands, Italy, and Germany are all due to hold auctions this week. We pencil in a further syndication from Germany while the EU has held an auction already this week. We look for estimated gross issuance for the week of E42.8bln, down from E57.3bln last week.
- Yesterday, Austria announced a dual-tranche mandate for a new 10-year Feb-25 RAGB maturing 20 February 2035 alongside a tap of the 1.85% May-49 Green RAGB (ISIN: AT0000A2Y8G4). We expect the transaction to take place on Tuesday.
- Both bonds are as expected (see Friday’s EGB Issuance, Redemption and Cash Flow Matrix), with the timing having been uncertain due to the budget. We look for the Feb-35 tranche to be sized between E4.5-5.0bln (including E250-500mln retention) with a tap of E1.0-2.0bln of the 1.85% May-49 Green RAGB.
- Also today, the Netherlands will hold an auction to sell E2.0-2.5bln of the 5-year 2.50% Jan-30 DSL (ISIN: NL0015001DQ7).
- Following this later today, Italy will hold a BTP Short Term and BTPei auction. As we expected, the new 2.55% Feb-27 BTP Short Term (ISIN: IT0005633794) will be launched for E2.75-3.00bln. Alongside this, E1.00-1.25bln of the 1.50% May-29 BTPei (ISIN: IT0005543803) and E1.00-1.25bln of the 1.80% May-36 BTPei (ISIN: IT0005588881) will be on offer.
- Also today, Germany will sell E5bln of the new 2.20% Mar-27 Schatz (ISIN: DE000BU22080).
For more details on issuance this week and next week see the full document here: EZ250128.pdf
