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Who’s feeling gutsy enough to trade the FOMC statement?

If you are, here’s a neat USD/JPY channel setup worth looking at!

Before moving on, ICYMI, yesterday’s watchlist looked for a possible GBP/JPY bearish pullback after seeing weak U.K. jobs data. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. headline PPI up by 0.8% as expected, core figure rose by 0.5%

Japanese core machinery orders rebounded by 10.8% vs. estimated 1.2% slump

BOJ starts JGB buying spree, yields edge higher

Australian Westpac consumer sentiment index down by 4.5%

Chinese industrial production rose by 0.7% vs. projected 1.0% decline

Chinese retail sales down by 6.7% y/y vs. estimated 7.0% slump

China’s fixed asset investment rose by 6.2% vs. estimated 6.1% gain

Japanese tertiary industry activity up by 0.7% vs. 0.8% forecast, 1.7% previous

Swiss PPI up by 0.9%, following earlier 1.3% gain

Asian shares move carefully ahead of FOMC decision

ECB calls for emergency governing council meeting to discuss bond rout

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.S. headline and core retail sales at 1:30 pm GMT
U.S. Empire State manufacturing index at 1:30 pm GMT
ECB head Lagarde’s speech at 4:20 pm GMT
FOMC policy decision & economic projections at 6:00 pm GMT
FOMC press conference at 6:30 pm GMT
New Zealand quarterly GDP at 10:45 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: USD/JPY

USD/JPY 1-hour Forex Chart

USD/JPY 1-hour Forex Chart

After weeks of sharp rallies, this pair is cruising steadily inside an ascending channel visible on its hourly time frame.

Can the uptrend continue today?

Price is gearing up to test support around the 134.50 minor psychological mark, which happens to be right smack in line with the 100 SMA dynamic inflection point.

The 100 SMA is above the 200 SMA to signal that support is more likely to hold than to break. If that’s the case, USD/JPY could pop back up to the channel resistance at the 136.00 handle or at least until the middle.

I’m counting on higher volatility later today, though, as Uncle Sam has the retail sales report and FOMC decision coming right up. A break below the channel bottom might pave the way for a sharp selloff, as a “buy the rumor, sell the news” situation could play out.

While the Fed’s 0.50% hike has been priced in for quite some time, market watchers might pay closer attention to the updated growth and inflation estimates. After all, this should give an idea of whether or not the central bank is bound to carry on with its aggressive tightening moves.

Meanwhile, the Japanese yen could stay on weak footing since the BOJ seems to be pleased about the currency’s recent selloff.