EURJPY TECHS: Heading South

Germany, Italy, Spain, France and Belgium are all scheduled to sell bonds this week. We look for E28.0bln of gross nominal issuance, down a little from last week's E28.5bln.

• Germany kicked off issuance on Tuesday, allotting E4.846bln of its new 0% Mar-24 Schatz. Issuance volumes were E6bln and this was the first technically uncovered Schatz auction since September.
• Italy has released a mandate for a new long 10-year BTPei maturing May-33. We look for a transaction size of E4-5bln.
• Spain will come to the market tomorrow. A new 3-year 0% May-25 Bono will be launched, alongside a reopening of the benchmark 10-year 0.70% Apr-32 Obli, the 15-year 4.20% Jan-37 Obli and the 0.65% Nov-27 Obli-Ei. E5-6bln nominals will be on offer alongside E250-750mln of the linker.
• Also tomorrow, France will come to the market to sell E10.5-11.5bln of LT / Green OATs on offer: the off-the-run 0% Nov-30 OAT, the 10-year 0% May-32 OAT, the 30-year 0.75% May-53 OAT and the 0.50% Jun-44 Green OAT.
• Belgium will look to conclude issuance on Friday with E500mln available through an ORI operation, with details to be confirmed tomorrow afternoon.

NET NOMINAL FLOWS: This week sees a E23.2bln Spanish redemption, USD1.5bln of a Lithuanian bond and E3.0bln EFSF bond all due to mature. Coupons for the week are estimated at E11.0bln. With estimated gross nominal issuance of E28.0bln, that leaves net flows for the week at negative E10.5bln (from positive E28.0bln last week).

For more see the MNI Issuance, Redemption and Cash Flow Matrix here.

• RES 4: 0.7314 High Jan 13 and a key resistance
• RES 3: 0.7277 High Jan 20
• RES 2: 0.7191 50-day EMA
• RES 1: 0.7148 20-day EMA
• PRICE: 0.7136 @ 06:47 GMT Feb 2
• SUP 1: 0.7034/6963 Low Feb 1 / Low Jul 16, 2020
• SUP 2: 0.6921 Low Jul 14, 2020
• SUP 3: 0.6884 0.764 proj of the Oct ‘21 - Dec ‘21 - Jan price swing
• SUP 4: 0.6759 50.0% Fibonacci retrace of the Mar ‘19 - Feb ‘21 rally

AUDUSD has rebounded from the Jan 28 low of 0.6968. The trend condition remains bearish though and the recent breach of key support at 0.6993/91, the Dec 3 2021 and Nov 2 2020 lows reinforces this theme - the move lower confirmed a resumption of the downtrend and opens 0.6963/21, the Jul 16 and Jul 14 2020 lows. The next firm resistance is seen at 0.7148/91, the 20- day and 50-day EMA values.

France, Belgium, the ESM and the EU are due to sell bills this week. We look for issuance from first round operations of E11.0bln, down from E20.2bln last week.

• France kicked off issuance for the week on Monday, selling E5.386bln of BTFs, the top of the target range: E2.590bln of the 12-week Apr 27, 2022 BTF, E1.398bln of the 21-week Jun 29, 2022 BTF and E1.398bln of the new 51-week Jan 25, 2023 BTF.
• Yesterday, Belgium sold E1.16bln of the 3-month May 12, 2022 TC.
• Also yesterday, the ESM came to the market to sell E1.494bln of the new 3-month May 5, 2022 bill.
• The EU will conclude bill issuance for the week this morning with E1.5bln of each of the 3-month May 6, 2022 EU-bill and the new 6-month Aug 5, 2022 EU-bill on offer.