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The major currencies traded on tight ranges during the Asian session as traders wait for a fresh catalyst.

Today, I’m looking at EUR/JPY possibly extending its short-term uptrend.

Before we talk setups, take a look at the top market headlines in the last couple of hours:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • Japan’s leading indicators at 5:00 am GMT
  • Germany’s industrial production at 6:00 am GMT
  • U.K. Halifax house price index at 7:30 am GMT
  • Italy’s retail sales at 8:00 am GMT
  • ECB’s Lagarde to give a speech in a forum at 12:10 pm GMT
  • Canada’s IVEY PMI at 2:00 pm GMT

What to Watch: EUR/JPY

EUR/JPY 1-hour Forex Chart
EUR/JPY 1-hour Forex Chart

Trump halting stimulus talks sent a risk-off wave in the markets, enough to drag EUR/JPY back down to the 124.00 major psychological level.

As you can see on the chart, 124.00 lines up with a 50% Fib retracement, previous resistance, and the 100 SMA on the 1-hour time frame. It’s also just above a rising trend line support just as Stochastic flags the euro’s “oversold” conditions.

Can EUR/JPY extend its upswing? It looks like there may be short-term risk-on momentum now that Trump has tweeted his support for $1,200 stimulus checks, paycheck protection, and airline stimulus after walking away from a bipartisan stimulus negotiation.

If London session traders focus on pricing in some kind of stimulus, or if today’s German industrial production comes in better than expected, then EUR/JPY could pop back up to this week’s highs (EUR/JPY’s daily average volatility is 80 pips).

But if market players focus on a lack of a stimulus deal, or if today’s lower-tier eurozone economic data print to the downside, then we could see EUR/JPY break below its trend line support and the 200 SMA.