Ready to trade the U.S. retail sales release today?
Here’s a potential breakout setup I’m watching on the hourly chart of USD/JPY.
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/USD’s support test ahead of the U.S. PPI release. 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 producer prices dipped 0.1% as expected in August
U.S. core PPI increased by 0.4% vs. estimated 0.3% gain
EIA crude oil inventories rose by 2.4M barrels
New Zealand economy grew 1.7% in Q2 2022 vs. 1.0% consensus
Japanese official Katayama: FX intervention not likely to prop JPY up in long runJapanese trade deficit widened from 2.16T JPY to 2.37T JPY
Australia’s MI inflation expectations slowed from 5.9% to 5.4%
Australia added 33.5K jobs in August vs. estimated 35.5K gain
Australian jobless rate ticked higher from 3.4% to 3.5%
Japanese tertiary industry activity sank 0.6% vs. estimated 0.1% dip
German wholesale price index chalked up 0.1% uptick vs. expected 0.5% gain
ECB Chief Economist Lane says rate increases will be larger
Fitch downgraded global growth forecasts for 2022, projects recession for EU and UK
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.S. headline and core retail sales at 12:30 pm GMT
U.S. Empire State manufacturing index at 12:30 pm GMT
U.S. Philly Fed index at 12:30 pm GMT
U.S. industrial production and capacity utilization data at 1:15 pm GMT
Chinese retail sales and industrial production at 2:00 am GMT (Sept. 16)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/JPY
This pair has formed higher lows and found resistance around the 145.00 handle, creating an ascending triangle on its hourly time frame.
Where will the U.S. retail sales report take USD/JPY next?Analysts are expecting to see a slowdown in consumer spending for August, as the headline figure probably dipped 0.1% while the core reading might come in flat.
Weaker than expected results might be enough to dampen hopes of a 1.00% interest rate hike from the Fed later this month, even after the latest CPI report reflected stubborn inflationary pressures.
In that case, USD/JPY could tumble below the triangle support and go for a selloff that’s the same height as the pattern or roughly 500 pips.
Stochastic is already indicating overbought conditions or exhaustion among buyers, so turning lower could give sellers the go signal for a breakdown.
The 100 SMA is above the 200 SMA for now, but the gap between the moving averages has narrowed significantly to hint at a bearish crossover soon.
Still, a huge upside surprise in U.S. retail sales could bolster expectations of another aggressive tightening move from the FOMC, which might lift USD/JPY back up to the triangle top.
Stay on your toes and practice proper risk management if you’re trading the news!