JGB TECHS: (M5) Off Highs, But Underlying Strength Persists

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg 
• RES 1: 96.360 - High Dec 11  
• PRICE: 96.230 @ 15:59 GMT Mar 25
• SUP 1: 95.900 - Low Jan 14  
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

Aussie 3-yr futures have pulled back from their most recent highs - a correction. A resumption of gains would signal scope for 96.360, the Dec 11 high. Clearance of this level would open 96.730, the Sep 17 ‘24 high. On the downside, a stronger reversal lower from current levels would signal a resumption of the downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.

USD/JPY tracks near 149.90 in early Wednesday dealings. Yen rose 0.53% for Tuesday's session, the second best performer in the G10 space (after SEK). Softer US data outcomes weighed on US yields, helping the yen. 

• Tuesday’s peak print of 150.94 for USD/JPY closely matched a firm resistance for the pair, respecting both the Feb 07 low and the 50-day EMA. A clear break of this area would signal scope for a stronger rally.
• Overall, the primary trend direction is down, and recent gains are considered corrective. A resumption of weakness would refocus sights on initial support at 148.18, the Mar 20 low. Further out, key support and the bear trigger remain at 146.54, the Mar 11 low, of which clearance would resume the technical downtrend.
• US yields were around 2bps weaker, with the 10back to the low 4.31% region. The US data outcomes keeping the US Citi economic surprise index in negative territory. US-JP yield differentials ticked lower, but remain above recent March lows.
• Locally on the data calendar, BoJ Governor Ueda appears before parliament at 9am local time today. Note as well we have the PPI services print for Feb. The market expects a 3.1%y/y outcome, unchanged from Jan. Later on the final Jan leading and coincident indices are out.
• Headlines crossed late yesterday that PM Ishiba will use the upcoming budgets to ease the inflation burden (although no new spending is reportedly planned), see this BBG link.
• Note in the option expiry space the following for NY cut later: USD/JPY: Y148.00-10($932mln), Y151.74($519mln), Y152.00($955mln). 

In today's Asia-Pac session, TYM5 is 110-20, -0-04 from closing levels. 

• According to MNI’s technicals team: initial technical resistance well above at 111-17.5/25 (High Mar 20 / 11).
• US tsys pared losses after Philly Fed non-mfg came out much lower than prior -32.5 vs. -13.1. They then extended gains after Conf. Board Consumer Confidence printed lower than expected. New Home Sales dipped but the up-revision to prior more than made up for the move.
• Fed Gov Kugler's (permanent FOMC voter) overall view on rates is unsurprisingly very similar to pre-FOMC and the Committee's overall signalling of a wait-and-see stance on rate moves.
• US 2-year and 10-year yields finished 2bps lower.
• Wednesday's focus is on Durables/Cap Goods at 0830ET, Tsy 5Y Sale at 1300ET, Fed Speak: MN Fed Kashkari Fed listens event (no text, Q&A) at 1000ET, StL Fed Musalem on economy/policy (text, Q&A) at 1310ET.