USDJPY TECHS: Bearish Reversal Signal

• RES 4: $103.26 - High May 5 and a bull trigger
• RES 3: $98.88 - High May 22
• RES 2: $95.44 - 76.4% retracement of the May 18 - Jul 2 bear leg
• RES 1: $91.42 - High Jul 20
• PRICE: $88.43 @ 07:08 BST Jul 21
• SUP 1: $81.27/70.14 - 20-day EMA / Low Jul 2 and the bear trigger  
• SUP 2: $69.32 - 76.4% retrace of the Dec 16 ‘25 - May 18 bull leg   
• SUP 3: $63.00 - Low Feb 3
• SUP 4: $58.83 - Low Dec 16 ‘25

Brent futures are trading closer to their recent highs. The latest rally has resulted in a move through resistance around the 50-day EMA - at $83.05. The break suggests scope for a stronger bounce and sights are on $95.44, the 76.4% retracement points of the bear leg between May 18 - Jul 2. Key support has been defined at $70.14, the Jul 2 low. Support at the 20-day EMA lies at $81.27.

Softer-than-expected headline wage data results in a marginal dovish reaction in gilts (ex-bonus measures were in line). Slightly lower-than-expected PSNB figures (and revisions lower) also lend support. A reminder that quality/collection issues hampered this labour market report this month.

• At first glance, there doesn’t look to be much in here that could change any MPC members vote at next Thursday’s decision. There is plenty more data still due this week (headlined by CPI tomorrow) and we’ll have more on the labour market report details in due course.
• Gilt futures +11 at 86.70.
• A bear cycle in remains intact in the contract and a fresh cycle low on Monday reinforces the theme. This paves the way for an extension towards 86.20, a 76.4% retracement point. Initial firm resistance has been defined at 88.07, the Jul 10 high. A clear break of this hurdle is required to signal a possible reversal.
• SONIA futures flat to +2.0 vs. +1.0 to -1.0 pre-data.
• Much of today’s focus will fall on how UK markets react to PM Burnham’s cabinet picks, particularly the selection of former Defence secretary Healey as Chancellor (Mahmood was the favourite for that role as of last week, but it appears that she sat too far to the right within the Labour spectrum). While Healey isn’t from the left of Labour it would seem that his appointment placated any worry from that wing of the ruling party.
• Elsewhere, PM Burnham told reporter that he would stick to the existing fiscal rules, although he highlighted that he would use “flexibility” within the rules as he seeks to reboot the UK economy.
• On the supply front, the DMO will sell GBP5bln of the 4.00% May-29 gilt this morning.

A military source, speaking to Fars News Agency, stated: "As long as the United States continues its hostile actions, the situation in the Strait of Hormuz will not change, and no permits will be issued for vessels to pass through this strategic waterway."

• "Full control of the Strait of Hormuz is in the hands of the Iranian armed forces. Any decision regarding the reopening or continuation of restrictions on this waterway will be made solely based on security considerations and national interests. Until the threats and hostile actions of the United States continue, there will be no change in this situation."
• "Responsibility for any disruption to maritime security and its consequences lies with those parties that have jeopardized the region's security through military actions and provocative policies."