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Weakening prospects of a stimulus deal in the U.S. weighed on higher-yielding bets against the safe-haven dollar.

Will the Aussie gain some ground against the yen today?

Before we talk setups, lemme show you the top headlines that traders dealt with during the Asian session:

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

Upcoming Potential Catalysts on the Economic Calendar:

  • Germany’s GfK consumer climate at 6:00 am GMT
  • BOE Governor Bailey to give a speech at 9:25 am GMT
  • U.K.’s CBI industrial order expectations at 10:00 am GMT
  • U.S. initial jobless claims at 12:30 pm GMT

What to Watch: AUD/JPY

AUD/JPY 1-hour Forex Chart
AUD/JPY 1-hour Forex Chart

The forex calendar tells us that there are none of the usual market movers on the docket in the next few hours. This means that traders will likely trade Brexit and U.S. stimulus prospects, as well as their uncertainty ahead of the last U.S. Presidential debate.

AUD/JPY is sporting an attractive setup as it forms a falling wedge on the 1-hour time frame. Aside from a potential reversal from the pattern, AUD/JPY’s current price is sitting around a support that had held in late September.

Will we see AUD/JPY bounce today? If traders go back to pricing in a U.S. stimulus deal, then we could see the Aussie break above the wedge and the 100 SMA on the 1-hour time frame. The 75.00 and 75.50 handles would make for good profit targets if we do see an upside breakout.

But what if Trump doubles down on his belief that we won’t stimulus anytime soon? Watch out for a break below the wedge and the 74.00 psychological handle for clues that AUD/JPY is in for a longer downswing.