BOJ: Fixed Rate Purchase Offer

Germany, the Netherlands, France, Spain, Belgium, the ESM and Italy will all look to issue bills this week. We look for issuance of E27.9bln at first round operations, up from E15.9bln last week.

• This morning, Spain will look to sell a combined E4.5-5.5bln of 6-month Aug 11, 2023 letras and new 12-month Feb 9, 2024 letras.
• Belgium will then come to the market to sell E2.0-2.4bln of the TCs: an indicative E1.0bln of the Short May 11, 2023 TC and an indicative E1.2bln of the Long Jan 11, 2024 TC.
• Later today, the ESM will then look to sell E1.1bln of the new 3-month May 4, 2023 bills.
• Italy will conclude eurozone bill issuance for the week on Friday, with the new 12-month BOT on offer. The auction size will be announced tomorrow.

• RES 4: 121.26 0.764 proj of the Dec 30 - Jan 19 - 30 price swing
• RES 3: 120.00 Psychological round number
• RES 2: 118.56/96 High Jan 19 / Dec 7 and a key resistance zone
• RES 1: 118.18 High Jan 27
• PRICE: 115.46 @ Close Feb 6
• SUP 1: 115.03/113.47 High Jan 30 / Low Jan 30 and key support
• SUP 2: 112.26 61.8% retracement of the Dec 30 - Jan 19 rally
• SUP 3: 111.59 Low Jan 6
• SUP 4: 110.77 Low Jan 4 and 76.4% of the Dec 30 - Jan 19 rally

BTP futures traded sharply higher on Feb 2 and the contract breached resistance at 116.94, the Jan 25 high. A continuation higher would signal scope for a test of firm resistance at 118.56, the Jan 19 high and 118.96, the Dec 7 high. A break of this zone would strengthen bullish conditions and confirm a resumption of the broader uptrend. Key short-term support lies at 113.47, the Jan 30 low. The latest pullback is considered corrective.

• RES 4: 136.67 38.2% retracement of the Oct 21 - Jan 16 bear leg
• RES 3: 134.77 High Jan 6 and a key resistance
• RES 2: 134.54 Low Dec 14
• RES 1: 132.94 50-day EMA
• PRICE: 132.16 @ 06:34 GMT Feb 7
• SUP 1: 130.56 20-day EMA
• SUP 2: 128.09/127.23 Low Feb 2 / Low Jan 16 and the bear trigger
• SUP 3: 126.81 1.382 proj of the Oct 31 - Nov 15 - 21 price swing
• SUP 4: 126.36 Low May 24 and a key support

USDJPY rallied Friday and gapped higher Monday. Attention is on resistance at 132.94, the 50-day EMA. Clearance of this level would highlight a stronger reversal and expose 134.77, the Jan 6 high. For now, gains are considered corrective and this is allowing an oversold condition to unwind. Firm support to watch lies at 128.09, the Feb 2 low. The bear trigger is at 127.23, the Jan 16 low.