USDJPY TECHS: Trend Needle Points South

• RES 4: 0.499 High Jul 1 and a key resistance  
• RES 3: 0.8478 High Jul 5
• RES 2: 0.8464 50-day EMA 
• RES 1: 0.8449 High Jul 26
• PRICE: 0.8446 @ 15:30 BST Jul 26
• SUP 1: 0.8393/83 Low Jul 25 17 and the bear trigger  
• SUP 2: 0.8366 2.236 proj of the Apr 23 - 30 - May 9 price swing
• SUP 3: 0.8328 1.0% 10-dma envelope
• SUP 4: 0.8279 3.00 proj of the Apr 23 - 30 - May 9 price swing

Despite the strong bounce Thursday in EURGBP, a bear cycle remains intact. Recent weakness resulted in a print below key support at 0.8397, the Jun 14 low and a bear trigger. A clear break of this level would confirm a resumption of the medium-term downtrend and pave the way for an extension towards 0.8366, a Fibonacci projection. The 20-day EMA has been breached, the next firm resistance is seen at 0.8467, the 50-day EMA.

• RES 4: 1.3193 2.236 proj of the Apr 22 - May 3 - 9 price swing     
• RES 3: 1.3142 High Jul 14 ‘23 and a key resistance
• RES 2: 1.3105 Bull channel top drawn from the Oct 4 ‘23 low
• RES 1: 1.2938/3044 High Jul 24 / 17 and the bull trigger 
• PRICE: 1.2857 @ 15:29 BST Jul 26
• SUP 1: 1.2850 Low Jul 25  
• SUP 2: 1.2781 50-day EMA
• SUP 3: 1.2741 Low Jul 4
• SUP 4: 1.2613 Low Jun 27 and a key support  

GBPUSD is trading just above this week’s lows. Thursday’s bearish extension resulted in a print below 1.2863, the 20-day EMA. A clear break of this average would signal scope for weakness towards 1.2781, the 50-day EMA. The move down appears to be a correction - for now. Moving average studies remain in a bull-mode set-up, highlighting a rising trend. Key resistance and the bull trigger has been defined at 1.3044, the Jul 17 high.

• Preliminary national accounts data this week showed an unexpectedly strong rebound in GDP growth in the second quarter, with robust underpinnings including a re-acceleration in underlying domestic demand.
• While monthly PCE data showed some potential weaknesses in the solid consumption story as Q2 drew to a close, including moderating personal incomes, spending remained relatively solid overall. Core PCE inflation was as expected in June, at 0.18% M/M, leaving intact the rough trend of disinflation after a particularly strong Q1.
• Elsewhere, activity data was mixed: US PMI readings continued to diverge in the July flash report, with an unexpected contraction in Manufacturing but Services posting a surprise rise, while regional Fed surveys continued the recent theme of unusually wide regional divergences in manufacturing activity.
• June's advance durable goods report was extremely mixed, with solid core readings offsetting severe aircraft-driven weakness in overall orders. Meanwhile, housing market activity continues to slow.
• In combination with the previous week’s data beats, this week’s readings all but shut the door on any lingering speculation that the FOMC could deliver a shock rate cut next week.
• Even so, broader risk-off factors meant Fed rate cut pricing actually increased this week: a first cut remains priced for September, with a total of almost 3 cuts seen by year-end.