USDJPY TECHS: Trend Needle Points South

• RES 4: 94.50 High Dec 16 
• RES 3: 94.00 Round number resistance   
• RES 2: 93.64 61.8% retracement of the Dec 3 - Jan 13 bear leg
• RES 1: 93.54 High Feb 3                 
• PRICE: 93.19@ Close Feb 3
• SUP 1: 92.11/91.52 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

Recent gains in Gilt futures continue to highlight a corrective phase and signal scope for a continuation higher near-term. Last week’s high print and Monday’s climb, reinforce current conditions. The contract has traded through 93.09, the Dec 20 high. Sights are on 93.64, a Fibonacci retracement. The bear trigger has been defined at 88.96, the Jan 13 low. Initial firm support lies at 91.52, the Jan 24 low.  First support 92.11, the 20-day EMA.

Austria, Spain and France are all due to hold auctions this week, whilst Finland and Belgium are due to hold ORI auctions. We also pencil in syndications from Belgium, Germany and Italy (although these are dependent upon relatively stable market conditions). We look for estimated gross issuance for the week of E41.0bln, broadly in line with the E40.9bln issued last week.

• This morning, Austria will hold an RAGB auction selling a combined E1.725bln of the 5-year 3.45% Oct-30 RAGB (ISIN: AT0000A38239) and the 15-year 3.20% Jul-39 RAGB (ISIN: AT0000A3D3Q8).
• On Thursday, Spain will hold a Bono/Obli and ObliEi auction to sell a combined E5.5-6.5bln of the 2.40% May-28 Bono (ISIN: ES0000012O59), the 3.10% Jul-31 Obli (ISIN: ES0000012N43), and the 4.00% Oct-54 Obli (ISIN: ES0000012M93). E250-750mln of the 1.15% Nov-36 Obli-Ei (ISIN: ES0000012O18) will also be on offer.
• Also on Thursday, France will hold a LT OAT auction. As expected, there is another large target range, with E11-13bln on offer. Also as we expected, France will launch a new 10-year 3.20% May-35 OAT (ISIN: FR001400X8V5) alongside reopening the 30-year on-the-run 3.25% May-55 OAT (ISIN: FR001400OHF4). Two off-the-run issues will also be on offer the 1.25% May-36 OAT (ISIN: FR0013154044) and the 1.25% May-38 OAT (ISIN: FR0014009O62).
• On Thursday, Finland will hold an ORI operation to sell up to E0.4bln. Details will be announced the preceding day.
• Finally on Friday, Belgium will hold an ORI operation. Details will be announced the preceding day.

For more details on issuance this week and next week see the full document here: EZ250204.pdf

• RES 4: 159.45 High Jul 12  
• RES 3: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing
• RES 2: 158.08/87 High Jan 15 / 10 and the bull trigger 
• RES 1: 155.72/156.75 20-day EMA / High Jan 23       
• PRICE: 155.23 @ 06:49 GMT Feb 4
• SUP 1: 153.72/34 Low Jan 27 / Low Dec 18  
• SUP 2: 152.55 61.8% retracement of the Dec 3 - Jan 10 bull leg
• SUP 3: 151.81 Low Dec 12   
• SUP 4: 151.06 76.4% retracement of the Dec 3 - Jan 10 bull leg   

USDJPY is in consolidation mode. The primary trend condition is bullish, however, the Jan 27 move down highlights a stronger bear threat. The pair has breached the 50-day EMA and a trendline drawn from the Sep 16 ‘24 low. A resumption of the bear leg would open 152.55, a Fibonacci retracement point. Initial firm resistance is at 156.75, the Jan 23 high. Clearance of this hurdle would be a bullish development.