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It’s a busy day for the dollar with both NFP and Fed-related catalysts on the docket.

How will today’s releases affect USD/JPY’s uptrend?

Before moving on, ICYMI, today’s Asia-London session watchlist checked out NZD/USD’s broken range consolidation ahead of New Zealand’s quarterly labor market data. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Japan’s markets out on bank holiday

RBNZ considering debt servicing restrictions and interest rate floors to fight housing-related financial stability risks

NZ jobless rate drops to record low of 3.4%, participation and hourly wages up in Q3 2021

Australia AIG construction index up from 53.3 to five-month high of 57.6 in October

Australia Markit services PMI moves to expansion territory, up from 45.5 to 51.8 in October

Australia records biggest drop in housing approvals in 21 years in September

Caixin services index up from 53.4 to 53.8 in October

Beijing tightens travel restrictions as city records new coronavirus cases

Major currencies see tight moves ahead of Fed’s decision

Upcoming Potential Catalysts on the Forex Economic Calendar:

ECB President Lagarde to give a speech in Lisbon at 10:00 am GMT
Eurozone’s unemployment rate at 10:00 am GMT
U.S. ADP report at 12:15 pm GMT
U.S. ISM services PMI at 2:00 pm GMT
U.S. factory orders at 2:00 pm GMT
EIA crude oil inventories at 2:30 pm GMT
FOMC’s monetary policy decision at 6:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: USD/JPY

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

It’s all about the dollar today as traders anticipate the Fed’s monetary policy decision.

Traders know that the Fed will taper their asset purchases to start unwinding their pandemic responses.

What they don’t know is how quickly FOMC members plan to end their asset-purchasing program. Not only that, but markets also don’t know exactly how long the Fed will set its sights on raising interest rates after ending its asset purchases.

Tapering more than $15B per month means that the Fed means business and could start thinking interest rates as early as June.

If we see hear dovish tones from Chairman Powell, however, or if he emphasizes that the end of asset purchases won’t necessarily lead to interest rate hikes, then traders can turn to currencies with more hawkish central banks for opportunities.

But wait, there’s more! Note that the ADP and ISM’s services PMIs – which usually lead the U.S. NFP report – will be published before the FOMC event. Reports that reflect labor market recovery will put more pressure on the Fed to tighten its policies.

If we see strong U.S. labor market data, or if the Fed signals hawkish vibes today, then USD/JPY can complete a bullish flag pattern and trade above the 115.00 major area of interest.

But if today’s releases point to the market getting ahead of the Fed’s plans, or if we see a huge buy-the-rumor, sell-the-news situation, then USD/JPY can extend its low-key downtrend on the 1-hour time frame and reach the 113.00 levels.