EURJPY TECHS: Uptrend Intact

June's retail sales report was extremely mixed, with strength at the end of Q2 offset by initial indications of a sharp pullback at the start of Q3.

• Retail sales rose by 1.5% M/M (nominal, SA) in June, a little lower than the 1.6% seen in the flash estimate, but still the strongest sequential  reading since December 2024.
• However, more attention in this release is on the July flash estimate which indicates a contraction of 0.8% M/M. That would still leave retail sales above the May level, but below the end-2024 level in a fairly significant setback.
• To be sure, June's reading was confirmed as solid. All subsectors improved (led by increases at food and beverage retailers, though clothing retailers led growth with +5.1%). Core sales (ex-gasoline stations and fuel vendors and motor vehicle and parts dealers) rose a 6-month best 1.9%.
• And volumes rose 1.5% M/M (implying zero price deflation in the month), bringing Q2 quarterly growth to 0.7% (our 3M/3M annualized est for June is 3.2%, highest since February).
• However with July's relapse, the overall picture looks dimmer. Indeed the 3M/3M nominal annualized rate is implied at 0.2% for July, which would be the slowest since July 2024 and well down from 10+% at the turn of the year. Assuming the volume reading is the same (-0.8%), the 3M/3M rate falls to 0.7%, suggesting a weak start to the quarter for the consumer.
• This is consistent with other readings that we are seeing that suggest a pullback in activity after a surprisingly solid economy in Q2, including July's soft jobs report.

Massive Tsy quarterly futures roll volumes from September'25 to December'25 today. The percentage complete has jumped to about a third of outstanding Sep'25 open interest. Direction appears better selling in 2s-10s vs. buying 30Y & 30Y Ultra spds in the afternoon. "First Notice" date next week Friday, August 29. Current roll details:

• TUU5/TUZ5 appr 1,140,600 from -8.88 to -8.12, -8.88 last; 40% complete
• FVU5/FVZ5 appr 1,798,200 from -5.25 to -4.5, -5.25 last; 39% complete
• TYU5/TYZ5 appr 1,468,400 from -1.25 to -0.5, -1.25 last; 37% complete
• UXYU5/UXYZ5 app 702,500 from -0.5 to +0.5, -0.25 last; 34% complete
• USU5/USZ5 appr 326,400 from 12.5 to 13.0, 12.5 last; 34% complete
• WNU5/WNZ5 appr 767,700 from 7.75 to 8.25, 7.5 last; 34% complete
• Reminder, Sep futures don't expire until next month: 10s, 30s and Ultras on September 22, 2s and 5s on September 30. Meanwhile, Sep'25 Tsy options will expire this Friday, August 22.

• 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.