USDJPY TECHS: Support Remains Exposed

Italy looks to hold an auction today while Belgium is due to hold an ORI operation on Friday. Germany and Belgium have already held conventional auctions earlier this week. We pencil in issuance of E17.0bln in the week, up from last week’s E10.8bln.

For the full MNI EGB Supply Daily with a recap of issuance so far this week and a look ahead to the next two weeks of issuance, click here.

• Italy today will hold a 5/10-year BTP /CCTeu auction, selling E1.0-1.5bln of the 1.35% Apr-30 BTP (ISIN: IT0005383309), E1.5-2.0bln of the 2.70% Oct-30 BTP (ISIN: IT0005654642), E3.0-3.5bln of the 3.60% Oct-35 BTP (ISIN: IT0005648149) and E1.5-2.0bln of the 1.05% Apr-34 CCTeu (ISIN: IT0005652828).
  • The MEF also announced that it will not hold the 3/7/15+ year BTP auction that had been scheduled for 13 August or the BTPEi auction scheduled for 26 August (the BTP Short Term auction scheduled for the same day will still go ahead). This is in line with recent convention and is not unexpected. The MEF noted that this decision was taken “considering the cash management activity”.
• Belgium will come to the market on Friday with ORI Facility with details to be confirmed tomorrow.

• RES 4: 151.21 High Mar 28
• RES 3: 150.49 High Apr 2  
• RES 2: 149.38 50.0% retracement of the Jan 10 - Apr 22 bear leg 
• RES 1: 148.81/149.18 High Jul 29 / High Jul 16 and the bull trigger
• PRICE: 147.94 @ 06:50 BST Jul 30
• SUP 1: 147.07 20-day EMA
• SUP 2: 146.20/145.86 50-day EMA / Low Jul 24 
• SUP 3: 145.16 61.8% retracement of the Jul 1 - 16 bull cycle
• SUP 4: 144.21 76.4% retracement of the Jul 1 - 16 bull cycle  

A bull cycle in USDJPY remains in place. The recovery that started Jul 24 signals the end of the corrective phase between Jul 16 - 24. Attention is on key resistance and the bull trigger at 149.18, the Jul 16 high. A break of this hurdle would confirm a resumption of the uptrend. Pivot support to monitor is 146.20, the 50-day EMA. A clear breach of it would instead signal scope for stronger reversal. First support is at 147.07, the 20-day EMA. 

• RES 4: 5575.00 High Mar 3 and a major resistance (cont) 
• RES 3: 5526.00 High Mar 19 / 20 (cont)
• RES 2: 5486.00/88.00 High May 20 and a bull trigger / High Jul 10
• RES 1: 5449.00 High Jul 27   
• PRICE: 5404.00 @ 06:28 BST Jul 30 
• SUP 1: 5292.00 Low Jul 22   
• SUP 2: 5281.00/5194.00 Low Jul 1 & 4 / Low Jun 23 and bear trigger
• SUP 3: 5138.00 High Apr 30 
• SUP 4: 5078.00 Low Apr 30  

The trend condition in Eurostoxx 50 futures is unchanged, it remains bullish and short-term weakness appears corrective. Support at 5281.00, the Jul 1 / 4 low, remains intact. A clear break of this level would strengthen a bearish threat. For bulls, a resumption of gains would refocus attention on the bull trigger at 5486.00, the May 20 high. It has recently been pierced, a clear breach of it would resume the bull cycle and open 5500.00.