USDJPY TECHS: Short-Term Trend Needle Points South

Austria, Germany, Spain and France are all due to hold auctions this week. We also pencil in syndications from Belgium, Ireland, Italy, Portugal and Slovenia of which Belgium and Slovenia announced mandates yesterday. We estimate gross issuance for the week at E56.4bln. 

• Yesterday Belgium announced a mandate to issue a new 10-year OLO maturing 22 June 2035 via syndication in the “near future”. We look for the transaction syndication to be held on Tuesday, this week and had fully expected it this week and look for expect the same E7.0bln size we have seen in the past two years with some upside risk.
• Slovenia also announced a mandate to launch a 30-year SLOREP via syndication in the “near future” on Monday. We had expected a Slovenian syndication this week and had noted that we expected a 30-year SLOREP launch in 2025 in our Deep Dive publication. We look for the transaction to be held on Tuesday and pencil in a transaction size of E1.0-1.5bln. The last 30-year SLOREP launch was in October 2020 and saw a E1.0bln transaction size but given that we are not sure whether there will be a new 2035 SLOREP launched this year (or just taps of the 1.50% Mar-35 SLOREP) we think there could be scope for a larger launch than in 2020. Note that there has not been a Slovenian early January syndication which has seen a total transaction size of less than E1.5bln for a number of years (sometimes as a dual-tranche transaction).
• This morning, Austria will hold a 5/50-year RAGB auction with a combined E2.013bln of the 2.50% Oct-29 RAGB (ISIN: AT0000A3EPP2) and the 0.70% Apr-71 RAGB (ISIN: AT0000A2QQB6) on offer.
• Also this morning, Germany will sell E4.5bln of the 2.00% Dec-26 Schatz (ISIN: DE000BU22072).

For more details on issuance this week and next week see the full document here: EZ250107.pdf

• RES 4: 160.00 Round number resistance   
• RES 3: 159.45 High Jul 12
• RES 2: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing  
• RES 1: 158.42 Intraday high  
• PRICE: 157.80@ 06:47 GMT Jan 7
• SUP 1: 156.05 20-day EMA
• SUP 2: 154.44 Low Dec 19  
• SUP 3: 154.00 50-day EMA
• SUP 4: 153.16 Low Dec 17  

USDJPY bulls remain in the driver’s seat and today’s fresh cycle high reinforces current bullish conditions. The recent breach of 156.75, the Nov 15 high, confirmed a resumption of the uptrend and has paved the way for a move towards 159.45, the Jul 12 high. Moving average studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support is 156.05, the 20-day EMA.

• RES 4: 5097.00 High Oct 14
• RES 3: 5080.00 High Oct 15      
• RES 2: 5040.00 High Dec 9 and a key short-term resistance
• RES 1: 5014.00 High Jan 6          
• PRICE: 4982.00 @ 06:27 GMT Jan 7  
• SUP 1: 4921.43 50-day EMA       
• SUP 2: 4829.00 Low Dec 20 and key short-term support     
• SUP 3: 4800.87 76.4% retracement of the Nov 21 - Dec 9 bull cycle 
• SUP 4: 4775.00 Low Nov 29 

A bull cycle in the Eurostoxx 50 futures contract remains intact. Yesterday’s strong rally highlights a reversal of the recent corrective pullback and attention is on resistance at 5040.00, the Dec 9 high. Clearance of this level would confirm a resumption of the bull cycle that started on Nov 21 last year. On the downside, initial firm support lies at 4921.43, the 50-day EMA. A break of 4829.00, the Dec 20 low would reinstate a bearish theme.