What a weak session for the dollar!
As markets wait for the Fed’s policy statement and presser, I’m setting my sights on USD/JPY’s potential support and resistance levels.
Before we look at the setups, check out the major headlines that affected the major currencies during the Asian session:
Fresh Market Headlines & Economic Data:
- API data show weekly U.S. crude supplies up by more than 8 million barrels
- Petrol leads fall in NZ manufacturing
- Japan’s machinery orders, wholesale prices sink as pandemic hits business spending
- Westpac: AU consumer sentiment back near pre-crisis levels
- China’s factory prices continued to fall in May, but consumer inflation slowed
- Chinese companies put U.S. listing plans on ice as tensions mount
- Dollar treads water as traders wait for Fed policy meeting
Upcoming Potential Catalysts on the Economic Calendar:
- France’s industrial production at 6:45 am GMT
- U.S. CPI data at 12:30 pm GMT
- FOMC statement and presser at 6:00 pm GMT
What to Watch: USD/JPY
USD/JPY is trading at the 107.50 area, which halfway through an established range on the 1-hour time frame and already half of the pair’s average daily ATR.In addition to that, USD/JPY is also sporting a low key bullish divergence on the chart.
If Powell and his team successfully communicate their economic optimism and their willingness to extend their easy policies, then we could see USD/JPY bounce back up to the 108.00 range resistance.
However, if the Fed fails to convince traders that they can cap short-term Treasury bond yields, or if central bank members are more concerned about the economy’s trajection than markets are expecting, then USD/JPY could break below the 107.50 area and make its way to the 107.00 or even 106.80 previous areas of interest.