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Anyone in for a range setup?

EUR/JPY is consolidating inside a wedge pattern and currently testing the resistance.

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:

  • 6:30 am GMT: French consumer spending and flash GDP
  • 7:00 am GMT: German preliminary GDP and import prices
  • 8:00 am GMT: Swiss KOF economic barometer and Spanish flash GDP

What to Watch: EUR/JPY

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

With a handful of preliminary reports coming up from the euro zone in the next trading session, I think it’s worth keeping tabs on EUR/JPY’s wedge resistance test!

Germany, France, and Spain are all scheduled to release their Q4 2020 flash GDP readings today, and traders are expecting to see another round of contractions.

Weaker than expected results would confirm that the region is still reeling from the pandemic, likely dragging the shared currency south.

In that case, EUR/JPY might retreat to its wedge support around the 125.75 area. Stochastic is on the move down after all, which means that sellers still have the upper hand.

Although the 100 SMA is above the 200 SMA, the gap between the indicators has narrowed enough to hint that a bearish crossover might be due.

The German flash GDP, in particular, might be a catalyst for a drop as analysts expect a flat reading but there are strong arguments for a downside surprise.