USDJPY TECHS: Outlook Remains Bearish

• 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.

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