EURJPY TECHS: Trend Needle Points North
- RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
- RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 1: 173.02/97 High Aug 13 / High Jul 28 and the bull trigger
- PRICE: 171.65 @ 07:12 BST Aug 27
- SUP 1: 170.56 50-day EMA
- SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
- SUP 3: 168.46 Low Jul 1
- SUP 4: 167.46 Low Jun 23
EURJPY is in consolidation mode. The trend structure remains bullish and the cross is trading closer to its recent highs. Key support to watch lies at the 50-day EMA at 170.56. A clear break of the average is required to highlight a stronger short-term bearish threat. Moving average studies are in a bull-mode position reinforcing the primary uptrend. Key resistance to watch is the Jul 28 high of 173.97, a break would confirm a continuation of the bull cycle.
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RATINGS: Finland Downgraded At Fitch, Turkey Upgraded At Moody's
Sovereign rating reviews of note from after hours on Friday include:
- Fitch downgraded Finland to AA; Outlook Stable
- Fitch affirmed Turkey at BB-; Stable Outlook
- Moody's upgraded Turkey to Ba3, outlook stable
- Morningstar DBRS confirmed Belgium at AA, Stable Trend
- S&P affirmed Luxembourg at AAA; Outlook Stable
- Scope Ratings affirmed Ireland at AA; Outlook Stable
- Scope Ratings affirmed Sweden at AAA rating; Outlook Stable
USDJPY TECHS: Support At The 50-Day EMA Holds
- 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: 147.95/149.18 High Jul 22 / 16 and the bull trigger
- PRICE: 147.86 @ 06:59 BST Jul 28
- SUP 1: 146.76 20-day EMA
- SUP 2: 146.01/145.86 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, however, a corrective phase that started Jul 16 has resulted in a retracement from recent highs. Short-term pivot support to monitor is 146.01, the 50-day EMA. It has been pierced, a clear break of this average would signal scope for stronger reversal and open 145.16, a Fibonacci retracement. For bulls, the latest recovery opens 149.18, the Jul 16 high, a break of this hurdle would resume the uptrend.
EUROZONE ISSUANCE: EGB Supply: W/C 28 July
Belgium, Germany and Italy look to hold auctions this week. We pencil in issuance of E17.0bln in the week, up from last week’s E10.8bln.
- Belgium will kick off issuance for the week on Monday with a conventional auction of a combined E2.5-3.0bln (in line with our size estimate following the BDA’s increase of its OLO issuance target for 2025). The bonds on offer will be the 2.60% Oct-30 OLO (ISIN: BE0000365743), the 3.10% Jun-35 OLO (ISIN: BE0000363722) and the 3.50% Jun-55 OLO (ISIN: BE0000361700). We had expected the 10-year on-the-run line to be on offer.
- Germany will come to the market on Tuesday to look to sell E4.5bln of the 2.20% Oct-30 Bobl (ISIN: DE000BU25059).
- Italy on Wednesday 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).
- Belgium will come to the market on Friday with ORI Facility with details to be confirmed the preceding day.
NOMINAL FLOWS: This week sees E26.2bln of redemptions: E24.2bln from a formerly 5-year Spanish Bono and E1.9bln from a formerly 10-year SLOREP. Coupon payments for the week total E17.2bln of which E11.2bln are Spanish, E5.8bln are Italian and E0.2bln are from the EFSF. This leaves estimated net flows for the week at negative E26.4bln, down from last week’s positive E2.8bln.
