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I’m starting the week off with this simple break-and-retest setup on AUD/JPY.

Think risk appetite would prop this pair up again?

Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!

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

Fresh Market Headlines & Economic Data:

Australian PM calls on China to lift trade sanctions

BOJ to hold presser to introduce new policy board members

Asian shares wobble on recession fears ahead of Fed decision this week

Crude oil slides lower as traders price in higher borrowing costs

ECB head Lagarde: Will raise rates for as long as it takes

ECB official Kazaks: Sept rate hike needs to be “quite significant”

German Ifo business climate index down from 92.3 to 88.6 vs. 90.0 forecast

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.K. CBI industrial order expectations at 10:00 am GMT
BOJ monetary policy meeting minutes at 11:50 pm GMT

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

What to Watch: AUD/JPY

AUD/JPY 1-hour Forex Chart

AUD/JPY 1-hour Forex Chart

I’m taking advantage of the calm before the FOMC storm this week by taking a look at this neat technical setup on AUD/JPY.

The pair is already hanging out at the area of interest around the 38.2% to 50% Fib levels, which line up with a former resistance zone.

Will it hold as support this time?

Technical indicators are hinting at a likely bounce, with the 100 SMA above the 200 SMA and the latter holding as dynamic support so far.

Stochastic is already on the move up to confirm a return in buying pressure, following a bullish divergence playing out.

If Aussie bulls can keep charging, they could take the pair back up to the swing high just past the 95.50 minor psychological mark.

A larger pullback, on the other hand, might reach the line in the sand at the 61.8% Fib near the 93.50 mark. Breaking below this might signal that more losses are in the cards.

Risk-on flows might be enough to prop up the higher-yielding Aussie early this week, but I’m a bit worried that expectations of higher borrowing costs from the Fed might dampen any gains.

In any case, better keep close tabs on the headlines when trading this one!