NORWAY: Stoltenberg: Budget Focus On Defense and Welfare

• Following the weekend's election results, front-end JPY vols have pulled back considerably - with Ishiba's pledge to stay on despite losing the upper house majority helping reassure markets for now. The pledge comes despite growing calls for a new leader for the LDP, raising the risk of Ishiba's term coming to an early end (comfortably the historical precedent when a ruling party loses the upper house).
• Ishiba flagged the ongoing negotiations with the White House as one of many reasons why he needs to stay on - Akazawa is already en route to Washington to accelerate progress toward a deal before the August 1st deadline.
• What does this mean for markets? Ishiba holding office for now removes the pressure to establish new spending plans and should keep the BoJ's (very) gradual hiking plans intact. As such, Nomura initiated a new short USD/JPY strategy this week, targeting Y142.00, citing election results and the scope for speculative JPY shorts to unwind.

• RES 4: 175.43 High Jul 11 ‘24 and a key medium-term resistance  
• RES 3: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 2: 173.43 High Jul 12 ‘24
• RES 1: 173.24 High Jul 15
• PRICE: 172.81 @ 07:36 BST Jul 22
• SUP 1: 171.84  Low Jul 16  
• SUP 2: 170.83 20-day EMA 
• SUP 3: 169.32 Low Jul 3   
• SUP 4: 168.07 50-day EMA   

The trend set-up in EURJPY is unchanged, it remains bullish. Fresh cycle highs last week reinforce current conditions. A price sequence of higher highs and higher lows highlights a dominant uptrend and note that moving average studies are in a bull-mode position. Sights are on 173.43, the Jul 12 ‘24 high. Support to watch lies at 170.83, the 20-day EMA. A move below this average would signal scope for a corrective pullback.

• RES 4: 6439.884 1.500 proj of the May 23 - Jun 11 - 23 price swing
• RES 3: 6402.44 1.382 proj of the May 23 - Jun 11 - 23 price swing
• RES 2: 6381.50 1.764 proj of the Apr 7 - 10 - 21 price swing
• RES 1: 6374.00 High Jul 21      
• PRICE: 6342.00 @ 07:23 BST Jul 22  
• SUP 1: 6288.25 Low Jul 17  
• SUP 2: 6256.07/6111.35 20- and 50-day EMA values   
• SUP 3: 5811.50 Low May 23 
• SUP 4: 5645.75 Low May 7 

S&P E-Minis traded to a fresh cycle high Monday before pulling back. The climb confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode position highlighting a clear dominant uptrend. Sights are on 6381.50, a Fibonacci projection. Key support is at the 50-day EMA, at 6111.35. Support at the 20-day EMA is at 6256.07.