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Japan's manufacturing sector remained firmly in expansion territory in July, with the final S&P Global Manufacturing PMI edging down slightly to 54.5 from 54.8 in June. While the headline index eased marginally, it still pointed to a seventh consecutive month of improving business conditions as the sector entered the second half of the year with robust momentum.

The survey highlighted broad-based strength beneath the headline figure. Manufacturing output posted its strongest increase in nearly 12-and-a-half years as firms responded to the steepest rise in new orders in four-and-a-half years. According to S&P Global, many companies linked the improvement to stronger global demand for semiconductors and expanding AI-related manufacturing activity. Firms also stepped up hiring, but the surge in production and order inflows led to mounting capacity pressures, prompting a sharp increase in purchasing activity and inventory accumulation.

At the same time, geopolitical risks continued to shape business conditions. Companies reported building inventories in response to the conflict in the Middle East, driving the fastest increase in input stocks in more than two years. Although input cost inflation moderated from June, it remained elevated and continued to feed through to higher selling prices. The survey therefore points to a manufacturing sector benefiting from powerful structural demand drivers, while still contending with supply-chain and inflation risks stemming from geopolitical uncertainty.

Economic Data

Market Takeaways

• Manufacturing PMI eased only marginally from 54.8 to 54.5, remaining firmly in expansion territory for a seventh consecutive month.
• Output recorded its strongest increase since early 2014, supported by the steepest rise in new orders in four-and-a-half years, pointing to robust underlying demand.
• Survey respondents highlighted stronger global demand for semiconductors and AI-related manufacturing as key drivers of the rebound.
• Firms continued to hire, but rapid growth in production and orders intensified capacity pressures, prompting the fastest increase in purchasing activity since April 2022 and the quickest inventory build-up in more than two years.
• While input cost inflation moderated from June, cost pressures remained elevated due in part to the Middle East conflict, allowing manufacturers to continue raising selling prices.

Full Japan PMI Manufacturing final release here.

Australia's manufacturing sector showed further signs of recovery in July, with S&P Global Australia Manufacturing PMI finalized at 52.0, up from 51.5 in June and the strongest reading since January. The sector has now remained in expansion territory for four consecutive months, supported by renewed growth in both production and new orders as business conditions improved at the start of the second half of the year.

The details of the survey suggest the recovery is beginning to broaden, albeit only gradually. Factory output expanded for the first time in six months, while new orders returned to growth for the first time since February. However, both increases were only marginal, indicating that underlying demand remains subdued. Manufacturers also continued to face elevated input costs and supply-side pressures, preventing a stronger rebound despite the improvement in headline activity.

S&P Global's Economics Director Andrew Harker said the latest data offered reassurance that the sector was recovering from the disruption caused by the Middle East conflict, but stressed that the improvement remained tentative. He warned that renewed deterioration in the region could quickly rekindle inflationary and supply pressures, leaving the nascent recovery vulnerable. The survey therefore points to improving business conditions, but also underscores that manufacturers remain highly exposed to geopolitical developments that could influence both inflation and the broader economic outlook.

Economic Data

Market Takeaways

• Manufacturing PMI rose from 51.5 to 52.0, marking the strongest expansion since January and extending the sector's expansion streak to four months.
• Output increased for the first time in six months, while new orders returned to growth for the first time since February, suggesting the manufacturing downturn linked to the Middle East conflict is easing.
• Despite the stronger headline reading, both output and demand expanded only marginally, indicating the recovery remains fragile rather than broad-based.
• Persistent price and supply-chain pressures continue to weigh on manufacturers, leaving the sector vulnerable to renewed geopolitical disruptions.
• The survey reinforces the view that Australia's manufacturing sector is stabilizing, but the durability of the recovery will depend heavily on whether inflation and supply pressures ease further.

Full Australia PMI Manufacturing final release here.

The Japanese yen strengthened significantly at the end of the week following reports of possible currency intervention by Japanese authorities, with speculation that the United States may also have supported the move. The Bank of Japan kept its interest rate at 1.00%, as expected, but said the economy is improving and inflation risks remain. This kept the possibility of another rate hike in September alive.

The Federal Reserve also left interest rates unchanged in a 9–3 vote, saying inflation is still too high and that future rate hikes remain possible if needed. The Bank of England also kept interest rates unchanged while continuing to monitor inflation and economic growth.

U.S. economic data was mostly weaker than expected. Durable Goods Orders, Consumer Confidence, and GDP growth all came in below forecasts, suggesting the economy is slowing. In Japan, the Tokyo Consumer Price Index rose 1.9% year-on-year in July, slightly above the expected 1.8%, showing that inflation remains steady.

Markets This Week

U.S. Stocks

The Dow Jones ended the week higher after a volatile week. Lower WTI crude oil prices early in the week helped lift the market, but stocks fell midweek as investors worried about high AI stock valuations. Buyers returned after the Federal Reserve kept interest rates unchanged. The 10-day moving average is now flat, showing the trend is losing momentum. With uncertainty still high, selling on rallies may remain the better strategy. Resistance levels are at 52,500, 53,000, 53,500 and 54,000. Support is seen at 51,500, 51,000, 50,000, 49,500 and 49,000.

Japanese Stocks

The Nikkei 225 continued to fall, moving closer to the 60,000 level as investors remained concerned about high AI stock valuations. A recovery in SoftBank shares late in the week and the Bank of Japan's decision to keep interest rates unchanged helped the index recover some losses. However, the overall trend remains lower. With a volatile week expected as markets assess the recent sharp rise in the Japanese yen, selling near the 10-day moving average remains the preferred strategy. Resistance is seen at 66,000, 67,000, 68,000, 69,000 and 70,000, while support is at 62,000, 61,000, 60,000 and 59,000.

USD/JPY

The Japanese yen strengthened sharply at the end of last week after reports that the Bank of Japan, and possibly the U.S. Federal Reserve, intervened to support the currency. Earlier in the week, the Bank of Japan kept interest rates unchanged but signaled that another rate hike in September remains possible. Despite the sharp move, many analysts still expect the yen to remain weak over the longer term, as Japan's plans to reduce taxes on food have raised concerns about the country's fiscal position. For short-term traders, the recent volatility could create good buying opportunities. Medium-term traders may also find attractive buying opportunities if they are willing to be patient and accept higher market volatility. Resistance is at 160.00, 161.00, 162.00, 164.00 and 165.00, while support is seen at 157.00, 156.00, 155.00 and 154.00.

Gold

Gold traded sideways last week as comments from major central banks about possible interest rate increases in the coming months limited buying. However, central banks continued to buy below the $4,000 level, helping to support prices. With strong support below and higher interest rates limiting upside, gold is likely to remain range-bound, making range trading the preferred strategy again this week. Resistance is at $4,150, $4,200, $4,300, $4,400 and $4,500, while support is at $4,000, $3,950, $3,900, and $3,800.

Crude Oil

WTI crude oil started the week lower after the United States and Iran resumed negotiations, but a lack of meaningful progress pushed prices back up, with oil closing the week near its highs. The market continues to react to headlines, making price moves difficult to predict. Short-term traders may find opportunities by following momentum, while medium-term traders could look for selling opportunities if prices continue to rally. Resistance is at $90, $95, $100 and $105, while support is at $80.00, $75.00, $67.50, $65, and $60.

Bitcoin

Bitcoin had a quiet week as expectations of higher U.S. interest rates and concerns over high AI stock valuations kept buyers cautious. Resistance around $65,000 remained strong, and the 10-day moving average has turned lower after several failed attempts to break above that level. Selling ahead of the $65,000 resistance level may offer the best trading opportunities this week. Resistance is at $65,000, $75,000, $80,000, $85,000, and $90,000, while support is at $60,000, $55,000 and $50,000.

This Week’s Focus

• Monday: Australia S&P Global Manufacturing PMI, Japan S&P Global Manufacturing PMI, E.U. HCOB Eurozone Manufacturing PMI, U.K. S&P Global Manufacturing PMI, U.S. S&P Global Manufacturing PMI and Construction Spending
• Tuesday: U.S. Trade Balance and Factory Orders
• Wednesday: Japan Monetary Policy Meeting Minutes and S&P Global Services PMI, E.U. HCOB Eurozone Services PMI and PPI, U.K. S&P Global Services PMI, U.S. S&P Global Services PMI
• Thursday: Australia Trade Balance, E.U. ECB Economic Bulletin and Retail Sales, U.K. S&P Global Construction PMI
• Friday: Japan Household Spending, U.S. Nonfarm Payrolls

An active week is expected as traders focus on the sharp fall in USD/JPY and continue to assess the reported intervention to support the Japanese yen. Stock markets will also be watching whether concerns over high AI-related stock valuations continue to weigh on sentiment. Key economic releases include global Manufacturing PMI data, the Bank of Japan's Monetary Policy Meeting Minutes, and the week's most important event, the U.S. Nonfarm Payrolls report, which could have a major impact on expectations for Federal Reserve policy.

Hello fellow traders. In this technical blog we’re going to take a quick look at the Elliott Wave charts of GBPCAD Forex pair published in members area of the website.

Recently, GBPCAD formed a 3-wave pullback after a rally, a textbook example of an Elliott Wave bullish sequence. Price completed a clear 3-wave move down from the peak and found support at the Equal Legs zone (buying area).In the following analysis, we explain the Elliott Wave pattern and the market outlook.

GBPCAD Elliott Wave 1  Hour  Chart 07.20.2026

GBPCAD is forming an 3-wave pullback from recent highs.  At the moment, structure of the pull back looks incomplete. We expect to see more downside to complete the pull back. As our members know , the buying zone is derived by measuring the Equal Legs area using the Fibonacci extension tool. The ideal support area comes in at 1.8774-1.862 . At that zone, we expect buyers to step in and take control, pushing the price higher in at least a three-wave bounce, or ideally extending toward new highs.

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Reminder : Our member chat rooms are open 24/7 and provide ongoing expert guidance on market trends and Elliott Wave analysis. Members are encouraged to ask questions about market structure and technical setups at any time. You can learn more about Elliott Wave Patterns at our Free Elliott Wave Educational Web Page

GBPCAD Elliott Wave 1  Hour  Chart 07.30.2026

The forex pair made decline as expected. GBPCAD found buyers at the Equal Legs zone,  producing a solid reaction from that area. As a result, long positions taken from the Equal Legs zone are now risk-free. We expect GBPCAD to continue trading higher, with a break above the (3) peak -1.9043 needed to confirm that the next leg up is in progress.

Important note: Our analysis is not based on Elliott Wave in isolation. We perform detailed higher-time-frame cycle analysis, which shows an incomplete market structure. This is one of the key drivers of price action, along with correlation analysis and broader market context.

We also teach our members in live analysis sessions how to identify incomplete bullish and bearish sequences.  Even a  14-day trial,  is enough to noticeably improve your trading analysis and forecasting approach.

USDJPY consolidates within a wide range on Friday after falling over 3% after intervention of Japan’s authorities, aiming to support weakening yen on Thursday.

Friday’s action moves within daily Ichimoku cloud (158.49/160.59) shaped so far in a long-legged Doji, signaling that traders look for fresh direction signal after yen registered the biggest daily gain since Nov 2022.

Although the impact from the intervention was strong, it was insufficient to spark stronger drop, as Thursday’s action surged through thick daily cloud but failed to register daily close below cloud base (158.49, reinforced by Fibo 61.8% of 155.02/163.98 upleg), with brief spike below the cloud base being contained by another strong support at 157.91, provided by 200DMA.

Daily studies have weakened (14-d momentum fell deep into negative territory and DMAs turned to almost full bearish setup, but sustained break below cloud base and 200DMA (also below nearby trendline support at 157.54) is needed to open way for deeper drop and reduce risk of bounce (the current move is still above major supports of larger uptrend).

The pair is on track for strong weekly loss and ends month of July in red that contributes to negative signals.

Markets wait for more information whether Japanese authorities plan to intervene again, to help yen to sustain the latest strong gains.

Res: 160.00; 160.59; 160.88; 161.28
Sup: 158.45; 157.96; 157.54; 157.14

Dow Jones: ⬆️ Buy

– Dow Jones index reversed from support zone

– Likely to rise to resistance level 53000.00

Dow Jones index recently reversed down from the support zone between the strong support level 51500.00 (which also stopped earlier waves iv and a), support trendline of the daily up channel from April and the 50% Fibonacci correction of the upward impulse from June.

The upward reversal from this support zone started the active minor impulse wave 5 – which belongs to wave (C) from March.

Given the strong daily uptrend, Dow Jones index can be expected to rise further to the next resistance level 53000.00.

DAX: ⬇️ Sell

– DAX reversed from resistance level 25875.00

– Likely to fall to support level 25300.00

DAX index today reversed down from the resistance zone between the strong resistance level 25875.00 (which reversed the price at the start of July) and the upper daily Bollinger Band.

The downward reversal from the resistance level 25875.00 is likely to form the daily Japanese candlesticks reversal pattern long-legged Doji.

Given the strength of the resistance level 25875.00 and the overbought daily Stochastic, DAX index can be expected to fall further to the next support level 25300.00.

USDJPY: ⬇️ Sell

– USDJPY broke support zone

– Likely to fall to support level 157.00

USDJPY currency pair recently broke the support zone between the support level 160.50 (which reversed the price at the start of July) and the support trendline from February.

The breakout of the support level 160.50 coincided with the breakout of the 38.2% Fibonacci correction of the upward impulse wave from the start of May.

Given the strong bearish sentiment seen across the FX markets today, USDJPY currency pair can be expected to fall further to the next support level 157.00.

TL;DR: The Dollar fell despite a hawkish Fed vote, rising yields, and rebounding oil — all bullish macro signals — as Japan's estimated $59 billion intervention and reported US-Japan cooperation introduced a policy-risk variable that overrode them. The key question now: is this a temporary correction, or the start of a broader reversal?

An Unusual Disconnect

Financial markets ended the week with an unusual disconnect. The Dollar suffered one of its weakest weekly performances in months even though the macro backdrop appeared increasingly supportive. The Federal Reserve produced a more hawkish vote split than markets had anticipated, US Treasury yields continued to push higher, Brent crude recovered sharply to end the week above $91, and expectations for a September Fed rate hike remained elevated at around 67% after recovering from post-FOMC lows.

Ordinarily, that combination would be expected to lift the Dollar rather than undermine it. Instead, the Dollar Index fell -1.64% over the week to finish at 99.80, its lowest close since mid-June. The weakness extended well beyond USD/JPY, indicating investors were reducing Dollar exposure more broadly even as traditional macro fundamentals pointed the other way.

That disconnect provides the framework for this week's analysis. The Fed's decision, the subsequent US economic data, and the rebound in oil prices each told part of the story, but none fully explained why the Dollar kept weakening. The missing piece lay elsewhere: by week's end, currency markets were responding not only to changing macro expectations but to a shift in how traders assessed official policy risk — temporarily overriding relationships that normally dominate Dollar trading.

A Hawkish Vote Could Not Deliver Lasting Dollar Support

The Federal Reserve provided little justification for the Dollar's subsequent weakness. Policymakers left interest rates unchanged at 3.50–3.75%, but the meeting was widely viewed as more hawkish than expected. The 9-3 vote included three dissents in favor of an immediate 25 basis point hike — Beth Hammack, Lorie Logan, and unexpectedly, Neel Kashkari — compared with the market's pre-meeting expectation that only Hammack and Logan would oppose holding rates steady. At the same time, Chair Kevin Warsh maintained the minimalist communication strategy introduced in June, characterizing the current policy stance as "watchful thinking, not watchful waiting."

Initially, markets reacted accordingly. Treasury yields rose, with the benchmark 10-year yield approaching 4.66%, while equities slipped during Warsh's press conference. Yet the Dollar failed to capitalize on what was, on balance, a more hawkish meeting than anticipated. The reason: investors distinguished between a Committee that remains concerned about inflation and one that feels compelled to tighten policy immediately. Warsh reiterated another rate increase could become appropriate if inflation stayed elevated, but his broader message was interpreted as patience rather than urgency.

That interpretation showed up in rate pricing over the following hours. Immediately after the meeting, traders briefly increased expectations the Fed would hold again in September, before those moves partially reversed later in the week. By Friday's close, futures still implied roughly a 67% chance of a September hike, confirming markets hadn't abandoned the tightening cycle. Even so, the FOMC failed to generate sustained Dollar buying — the first sign that broader forces were beginning to outweigh the Fed's own policy signals.

GDP and PCE Turned Patience Into the Dominant Narrative

The week's key US data reinforced rather than overturned the market's initial reading of the FOMC. Advance estimates showed the economy expanded at an annualized 1.5% in the second quarter, falling well short of the 2.1% consensus forecast. The miss was significant enough to strengthen the argument that growth is moderating, giving the Fed more room to wait before deciding whether another rate increase is ultimately required.

The following day's PCE report completed the picture. Headline inflation slowed to 3.7% year-over-year, while core PCE eased further to 3.3%, continuing the gradual moderation in underlying price pressures. Neither report fundamentally altered the Fed's longer-term inflation challenge, but together they reinforced the view that there was no immediate need to rush into another hike.

This became the genuine macro driver behind the Dollar's decline. Thursday's broad-based selling reflected a straightforward reassessment of US fundamentals — investors marked down expectations for near-term tightening while maintaining confidence rates would remain restrictive for longer. That distinction matters because it separates the Dollar's initial weakness, which GDP and inflation largely explain, from the more puzzling behavior that emerged once traditional Dollar-positive factors began returning.

Oil Rebounded, Yields Rose, but the Dollar Still Fell

If weaker GDP and softer inflation explained the Dollar's decline through Thursday, Friday's market action became much harder to reconcile with conventional macro relationships. Brent crude completed a dramatic turnaround from Monday's low of $80.67, surging back above $91 by the weekly close as renewed hostilities in the Middle East revived concerns over global energy supplies. At the same time, the benchmark 10-year Treasury yield climbed to around 4.74%, extending its recent advance, while markets modestly rebuilt expectations for another Fed hike in September.

Ordinarily, those developments should have provided meaningful support for the Greenback — higher oil prices reinforce inflation concerns, while higher Treasury yields increase the Dollar's interest-rate advantage. Fed funds futures indeed edged back toward pricing a roughly 67% probability of a September hike after briefly moving more dovish following the FOMC meeting. By Friday afternoon, much of the week's macro backdrop had shifted back toward a Dollar-supportive configuration.

Yet the Dollar failed to respond. The Dollar Index remained under pressure despite recovering only modestly from Thursday's lows, while broader Dollar weakness persisted against most major currencies. That divergence became the clearest evidence that traditional macro drivers weren't fully explaining price action.

Intervention Changed the Market's Risk Calculus

The missing piece emerged from Japan rather than Washington. By week's end, it had become increasingly clear that the sharp selloff in USD/JPY wasn't merely speculative positioning ahead of the Bank of Japan meeting. Reuters reported that Japan intervened to support the Yen during New York trading on Thursday, with BoJ data indicating authorities may have spent as much as $59 billion. More significantly, reports later suggested the US Treasury had warned banks to "stand ready for future action," before the Financial Times reported Washington itself bought Yen on Friday — the first such support operation since 2011.

Japan's top currency diplomat Atsushi Mimura added that US support had gone "beyond psychological support," although strategists cautioned this should be viewed as tacit cooperation rather than a repeat of the coordinated G7 intervention seen after the 2011 Tohoku earthquake.

For currency markets, the precise operational details mattered less than the change in perception. Intervention doesn't need to occur every day to influence prices — once traders believe governments are prepared to act again, the risk-reward balance of holding large Dollar-long positions changes immediately. That policy risk became a new variable in foreign exchange markets, one that temporarily outweighed traditional macro signals from Treasury yields, oil prices, and Fed expectations.

Importantly, intervention didn't replace fundamentals — it amplified their market impact. Softer US data had already encouraged investors to reduce Dollar exposure earlier in the week. Official action then made it substantially more expensive to maintain or rebuild those positions, particularly against the Yen. While the intervention directly targeted USD/JPY, its influence spread more broadly by encouraging investors to trim long Dollar exposure across the foreign exchange market — helping explain why the Dollar Index continued to struggle even after many of its traditional macro supports had re-emerged.

Correction or Reversal? Three Tests for the Dollar

The key question now is whether this week's Dollar decline marks the beginning of a broader downtrend or merely a correction within the larger recovery that started in June. While the reported US-Japan cooperation and Japan's intervention materially altered market positioning, they're unlikely to become a permanent feature of the FX market. Authorities have little incentive to force USD/JPY sharply lower from current levels around 157–158; instead, their apparent objective is preventing another disorderly surge toward the 160–164 area that had begun fueling one-way speculative positioning. If the exchange rate stays below those levels or resumes its advance more orderly, the perceived threat of further intervention should gradually diminish.

As that intervention premium fades, three traditional macro drivers are likely to regain influence:

• US economic data, beginning with next week's non-farm payrolls report. Another disappointing employment reading would reinforce the view the Fed can remain patient, supporting the idea that the Dollar's correction has further to run. A resilient labor market, conversely, could quickly revive confidence that another hike remains likely later this year.
• The Middle East. Brent's recovery above $91 reflects a market still assigning a meaningful geopolitical risk premium to energy prices. Shipping through the Strait of Hormuz remains well below normal despite signs of partial recovery. A renewed escalation involving Iran would strengthen the Dollar through two channels: higher oil prices reinforcing inflation concerns and supporting higher yields, and deteriorating risk sentiment reviving the Dollar's safe-haven appeal.
• Whether intervention continues to dominate FX positioning, or fades enough for traditional macro forces to reassert themselves, will ultimately determine whether this week's Dollar weakness proves temporary or marks the start of a more durable reversal.

ActionForex's Technical View on the Dollar Index

The Dollar Index extended its decline from 101.80 last week, but the pullback has yet to inflict meaningful technical damage on the broader rally that began from 95.55. The index is currently holding above a key confluence of support formed by the rising near-term trend line and the 38.2% retracement of 95.55 to 101.80, at 99.41.

As long as this support zone remains intact, the decline from 101.80 can still be viewed as a corrective pullback within the broader rebound from 95.55. A decisive rebound from current levels would revive the case for another advance through 101.80, opening the way toward the 50% retracement of 110.17 to 95.55, at 102.86.

However, the technical outlook would deteriorate if 99.41 and the rising trend line are broken on a sustained basis. Such a move would argue the recovery from 95.55 completed as a three-wave corrective structure at 101.80, leaving the larger downtrend from 110.17 intact. In that scenario, near-term focus would shift to the 61.8% retracement at 97.93, with a firm break there exposing a retest of the 95.55 low.

Key Takeaways

• The Dollar Index fell -1.64% for the week despite a hawkish 9-3 Fed vote, rising yields, and an oil rebound above $91 — factors that would normally support the currency.
• Weaker-than-expected Q2 GDP (1.5% vs. 2.1% consensus) and cooling PCE inflation (3.3% core) explained the Dollar's initial decline through Thursday.
• Friday's failure to rally despite rebounding oil and rising yields signaled a second, separate driver: Japan's estimated $59 billion intervention and reported US-Japan cooperation to support the Yen.
• Intervention didn't replace macro fundamentals but amplified their impact, making it costlier to hold long Dollar positions and pushing weakness beyond USD/JPY into broader Dollar pairs.
• The Dollar Index is holding above 99.41 support; a sustained break would expose 97.93 and risk a retest of the 95.55 low, while a rebound targets 101.80 and then 102.86.