Global macro overview for 25/07/2017:

The better than expected data from US economy has surprised the market participants. The US PMI Composite Output Index strengthened to 6-month high at the level of 54.2 points from 53.9 points previously. The Flash Services sector PMI index was unchanged in the month and in line with consensus forecasts at 54.2 points and the Flash PMI Manufacturing reading for July increased to 53.2 points from the June reading of 52.0 points and was better than market participants expectations of 52.3 points. The other good news is that the new orders increased at the fastest pace in six months especially in the services sector of the economy, who recorded the biggest expansion in two years. On the other hand, the exports orders declined slightly due to the lack of the US Dollar strength in overseas countries. At last, the job market remains in a good shape with the strongest job pace creation in 2017, so the next NFP Payrolls number is again expected to be above 200k.

In conclusion, the released data suggests solid US GDP growth with some evidence of underlying acceleration of economic activity. Despite the weaker US Dollar, the current data shouldn't discourage the Federal Reserve policy members to continue to normalize the monetary policy, although subdued pricing data will dictate underlying caution.

Let's now take a look at the USD/JPY technical picture at the H4 timeframe. The market is bouncing from the technical support at the level of 110.61 and the next target for bulls is at the level of 111.71. The clear bullish divergence and oversold market conditions support the view.