EURJPY TECHS: Support Remains Intact

SFRH5 paper paid 95.700 on 6.4K, taken bid over.

• RES 4: 95.57 High Dec 11 ‘24 
• RES 3: 95.11 High Dec 12 ‘24   
• RES 2: 94.75 76.4% retracement of the Dec 3 - Jan 13 bear leg
• RES 1: 94.35 High Feb 6                 
• PRICE: 92.92 @ Close Feb 12
• SUP 1: 92.63/91.52 20-day EMA / Low Jan 24                                
• SUP 2: 91.10 Low Jan 20
• SUP 3: 89.68/88.96 Low Jan 15 / 13 and the bear trigger
• SUP 4: 88.87 2.764 proj of the Dec 20 -27 - Jan 2 price swing

A bull cycle in Gilt futures remains in play for now, and the latest pullback is considered corrective. Last week’s extension has reinforced current conditions. The contract has traded through 93.09, the Dec 20 high, and breached 93.64, the 61.8% retracement of the Dec 3 - Jan 13 bear leg. Sights are on the 94.75, the 76.4% retracement. Initial firm support lies at 92.63, the 20-day EMA.

France has released a mandate for a 30-year OAT syndication while Greece, Germany, Portugal and Italy are all still due to hold auctions this week. The EU and Italy have both already held syndications while the Netherlands and Germany have already held auctions. There are also possible syndications still to come this week from Belgium, Germany, Slovakia or Spain with a possible RFP from the ESM. We look for estimated gross issuance for the week of E62.1bln, up from E26.2bln last week.

• France is likely to hold a syndication today after it announced a mandate for a new 30-year OAT maturing 25 May 2056. We pencil in a E8-10bln transaction size.
  • We had noted that we thought this 30-year OAT syndication would come in the W/C 24 February, but there was a big risk it could come as soon as this week.
• Today, Greece will hold a GGB auction selling E250mln of the 10-year 3.625% Jun-35 GGB (ISIN: GR0124041758) that was launched via syndication on 14 January.
  • This is broadly in line with our expectations, and we note that this will be the 17th consecutive GGB auction where either a 5-year or 10-year GGB has been reopened.
• Also this morning, Germany will return to the market to hold a 30-year Bund auction. E1.5bln of the 0% Aug-50 Bund (ISIN: DE0001102481) will be on offer alongside E1bln of the 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
• Portugal will hold an OT auction for E1.25-1.5bln, also this morning. On offer will be the 2.25% Apr-34 OT (ISIN: PTOTEWOE0017), the 1.15% Apr-42 OT (ISIN: PTOTEPOE0032) and the 1.00% Apr-52 OT (ISIN: PTOTECOE0037).
• Tomorrow, Italy will hold a 3/7-year BTP auction. On offer will be E2.75-3.25bln of the on-the-run 3-year 2.70% Oct-27 BTP (ISIN: IT0005622128), E1.00-1.25bln of the off-the-run 3.45% Jul-31 BTP (ISIN: IT0005595803) andE1.00-1.25bln of the on-the-run 7-year 3.15% Nov-31 BTP (ISIN: IT0005619546).
  • As announced alongside the syndication mandate, the 15+ year BTP line was cancelled to facilitate the Oct-40 BTP syndication.

For more details on issuance this week and next week see the full document here: EZ250212.pdf