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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
Major Forex Pairs Price Performance from MarketMilk

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
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.