USDJPY TECHS: Bullish Reversal Signal

• RES 4: 0.8769 High Jul 28  
• RES 3: 0.8744 High Aug 7 
• RES 2: 0.8682 High Aug 8  
• RES 1: 0.8667 High Aug 20 
• PRICE: 0.8659 @ 16:39 BST Aug 22
• SUP 1: 0.8597 Low Aug 14 
• SUP 2: 0.8562 50.0% retracement May 29 - Jul 28 upleg 
• SUP 3: 0.8540 Low Jun 30 
• SUP 4: 0.8514 61.8% retracement May 29 - Jul 28 upleg

EURGBP continues to trade above its recent lows. For bulls, a stronger recovery would refocus attention on the bull trigger at 0.8769, the Jul 28 high. On the downside, note that recent weakness resulted in a breach of key support at 0.8611, the Jul 31 low. The cross has also pierced the 50-day EMA, at 0.8619. A clear breach of these supports would instead highlight a stronger reversal. This would open 0.8562, a Fibonacci retracement point. 

The highly-anticipated Jackson Hole speech by Federal Reserve Chair Powell brought a dovish message, spurring a rally across global FI Friday that included EGBs and Gilts.

• Bunds outperformed global peers in early trade, though moves were limited as markets awaited Powell's comments. German Q2 GDP was revised downward, with ECB Q2 negotiated wages broadly in line with tracking estimates.
• Yields dropped sharply in mid-afternoon trade as Powell signaled openness to a September Fed cut in more overt fashion than had been expected, noting a "shifting balance of risks may warrant adjusting our policy stance".
• Bund yields finished a little higher than the levels seen in the immediate aftermath of Powell's speech, but Gilt yields continued to fall, closing near session lows.
• A Bloomberg sources piece pointed to a September ECB hold, but markets took little impact with rate markets already pricing that in.
• The German and UK curves both bull flattened on the day, while periphery/semi-core EGB spreads tightened in a broader risk rally.
• For the week, the German curve bull flattened with the UK's twist flattening: UK 2Y +1.1bp, 10Y -0.3bp; German 2Y -2.5bp, 10Y -6.6bp.
• Saturday includes a panel at Jackson Hole with BOE's Bailey and ECB's Lagarde, with next week's calendar highlight being August flash Eurozone inflation data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.4bps at 1.948%, 5-Yr is down 3.8bps at 2.277%, 10-Yr is down 3.5bps at 2.722%, and 30-Yr is down 1.8bps at 3.309%.
• UK: The 2-Yr yield is down 2.6bps at 3.944%, 5-Yr is down 2.3bps at 4.101%, 10-Yr is down 3.6bps at 4.693%, and 30-Yr is down 3bps at 5.548%.
• Italian BTP spread down 2bps at 80.4bps / French OAT down 1.2bps at 69.5bps  

RRP usage rises to $36.275B this afternoon from $25.358B yesterday -- compares to $22.344B on Tuesday, Aug 19 - lowest since April 5, 2021. Total number of counterparties at 16. This week's retreat compares this year's high usage of $460.731B on June 30.