Uncle Sam is printing the first reading of Q4 2020’s economic activity today!
How will this affect USD/JPY and the existing market themes?
Before we talk charts, make sure you’ve read all the major headlines that have moved the markets during the Asian session:
Major Forex Pairs Price Performance from MarketMilk
- 2021 January FOMC Meeting: Fed prepares for a tough year
- Fed still in crisis-fighting mode as recovery appears to moderate
- U.S. SEC ‘actively monitoring’ volatility in equity markets
- Explainer: How retail traders squeezed Wall Street for bets against GameStop
- New Zealand trade surplus drops to NZ$17 Million in December
- Australia’s surging terms of trade delivers boost for economy
- Japan retail sales slip 0.3% on year in December
- Asia shares undone by Wall St swoon, short seller squeeze
- Australia, New Zealand dollars suffer sharp reversal as global mood swings
Upcoming Potential Catalysts on the Economic Calendar:
- Germany’s preliminary CPI out during the London session
- Switzerland’s trade balance at 7:00 am GMT
- Spain’s unemployment rate at 8:00 am GMT
- U.S. advance GDP at 1:30 pm GMT
What to Watch: USD/JPY
USD/JPY 4-hour Forex Chart
In case you missed it, the combination of (a) a dovish Fed statement, (b) slower-than-expected vaccination schedule, (c) end-of-month profit-taking, and (d) memelord retail investors betting the farm on a gaming company caused risk aversion in the markets and pushed the dollar higher across the board during the U.S. session.
The trend extended to Asian session trading when mid-term data releases from Australia and New Zealand didn’t exactly inspire optimism for global growth.With Uncle Sam printing its first reading of the Q4 2020 GDP, I’m checking out USD/JPY’s 4-hour time frame for possible opportunities.
See, the pair is testing a trend line that’s been holding as resistance since early August.
If today’s U.S. GDP release prints much worse than the already scaled-down expectations of a 4.2% uptick (from +33.4% in Q3), then global growth concerns could continue to push the safe-haven dollar higher. USD/JPY could break above the trend line and hit 105.00 – 105.50 levels before seeing bearing pressure.
But if consumer activity turns out stronger than many are expecting, then the dollar could give up some of its intraweek gains against the yen.
