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Later today, we’ll get fresh details on the next U.S. administration’s economic stimulus plan, which could bring volatility and pressure on the Greenback.

Does this mean the recent bounce in USD/JPY was another selling opportunity in the longer-term downtrend?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/USD as risk sentiment continues to drive price action, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 14002.59 +0.45%
FTSE: 6792.35 +0.69%
S&P 500: 3820.57 +0.28%
NASDAQ: 13215.22 +0.66%
US 10-YR: 1.093% +0.005
Bund 10-YR: -0.555% -0.034
UK 10-YR: 0.287% -0.024
JPN 10-YR: 0.036% +0.004
Oil: 52.63 -0.53%
Gold: 1,844.50 -0.56%
Bitcoin: 39,624.25 +4.60%
Ethereum: 1,206.85 +5.44%

Fresh Market Headlines & Economic Data:

Dow rises 100 points, Nasdaq hits record as investors await Biden stimulus package unveiling

Oil prices ease as pandemic overshadows Chinese and U.S. data

Bitcoin Bounces as Options Market Sees 20% Chance of $50K at Month’s End

U.S. Consumer comfort drops to six-month low on finances concern

Italy plunges into political crisis

Germany targets pandemic recovery without massive stimulus push

BOE vows to improve its public explanation for $1.2 trillion QE

Upcoming Potential Catalysts on the Economic Calendar

Fed Chair Powell speech at 5:30 pm GMT
Fed Kaplan speech at 6:00 pm GMT
New Zealand FPI at 9:45 pm GMT
BOJ Governor Kuroda speech at 11:50 pm GMT
Australia Home loans at 12:30 am GMT (Jan. 15)
China House Price Index at 1:30 am GMT (Jan. 15)

What to Watch: USD/JPY

USD/JPY 1-Hour Forex Chart
USD/JPY 1-Hour Forex Chart

On the one-hour chart above of USD/JPY, we can see a pretty clean technical setup favoring the bears. The market has been in a longer-term trend lower since the massive stimulus measures by the Fed last March, but recently the pair has bounced higher, likely a reaction to rising U.S. bond yields over the past week.

This brought USD/JPY back to the falling ‘highs’ pattern, which may draw in the bears, especially if we see Biden come thru today with another massive stimulus package (Biden could announce $2,000 direct payments on Thursday).

We’ve also got Fed Chair Powell making a speech later today, and if he tones down talks of inflation, that could also be another catalyst for Dollar bears to work with.

So, if the above scenarios play out and USD/JPY continues to move lower, then we could see the beginning of a fresh swing move back to the downside.

And even though the market is already move lower from the trendline, it’s probably a good idea to wait for the events and market reaction before committing to one side of the market or the other. Quick profit taking and/or a different scenario may play out from described above, so it’s a good idea to get confirmation first before putting up risk.