USDJPY TECHS: Holding On To Its Recent Gains

• RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 150.92 High Aug 1 and a key resistance 
• RES 2: 149.64 76.4% retracement of the Aug 1 - Sep 17 bear leg 
• RES 1: 148.38/149.14 Intraday high / High Sep 3  
• PRICE: 148.27 @ 06:58 BST Sep 22
• SUP 1: 146.77/145.49 Low Sep 18 / 17 and a pivot support 
• SUP 2: 145.40 50% retracement of the Apr - Aug upleg
• SUP 3: 144.10 61.8% retracement of the Apr - Aug upleg
• SUP 4: 143.45 Low Jul 3 

USDJPY recovered sharply from last Wednesday’s low and the pair is holding onto its latest gains. A bullish candle pattern on Sep 17 - a hammer formation - provided an early reversal signal. Last Wednesday, the pair breached a number of important short-term support levels, however, this has not confirmed a bearish threat. A continuation higher would open 149.14, the Sep 3 high. Pivot support is 145.49, the Sep 17 low.

• RES 4: 5600.00 Round number resistance 
• RES 3: 5558.30 0.764 proj of the Aug 1 - 22 - Sep 2 price swing  
• RES 2: 5525.00 High Aug 22 and a bull trigger  
• RES 1: 5505.00 High Sep 19     
• PRICE: 5476.00 @ 06:35 BST Sep 19
• SUP 1: 5405.03/5366.00 20-day EMA / Low Sep 17
• SUP 2: 5302.00 Low Sep 2 and a key short-term support  
• SUP 3: 5262.18 76.4% retracement of the Aug 1 - 22 bull leg   
• SUP 4: 5181.00 Low Aug 1 and key support  

Eurostoxx 50 futures recently traded through resistance around the 20-day EMA - a bullish development - and the subsequent rally reinforces a bullish theme. The move signals potential for a climb towards 5525.00, the Aug 22 high and a bull trigger. On the downside, key support has been defined at 5302.00, the Sep 2 low. Clearance of this level is required to reinstate a bearish theme.

• Italy will look to hold a BTP Short Term / BTPei auction on Wednesday with E2.0-2.5bln of the on-the-run 2.10% Aug-27 BTP Short Term (ISIN: IT0005657330), E1.00-1.25bln of the 1.10% Aug-31 BTPei (ISIN: IT0005657348) and E1.00-1.25bln of the 2.40% May-39 BTPei (ISIN: IT0005547812) on offer.
• Germany will return to the market on Wednesday with E4bln of the 7-year 2.50% Nov-32 Bund (ISIN: DE000BU27014) on offer.
• Italy will conclude issuance for the month on Friday with a 5/10-year BTP / CCTeu auction. Details will be confirmed on Tuesday. We expect the 2.70% Oct-30 BTP (ISIN: IT0005654642) to be on offer alongside a final reopening of the 3.60% Oct-35 BTP (ISIN: IT0005648149). However, there is a chance that a new 10-year BTP is launched, and also a good chance that there is an off-the-run 10-year BTP on offer alongside the 3.60% Oct-35 BTP. The Apr-34 CCTeu has been on offer at every auction since its launch in May.

NOMINAL FLOWS: The upcoming week will see redemptions of E7.1bln, E6.0bln from a formerly 10-year ESM bond and E1.1bln from a formerly 10-year LATVIA bond. Coupon payments for the week total E3.0bln of which E2.8bln are French. This leaves estimated net flows for the week at a positive E24.9bln versus negative E17.9bln last week.