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Is it time for USD/JPY to pop back up above the 110.00 handle? Here’s the forex setup that I’m looking at this week.

As you can see on the chart below, USD/JPY is a hair’s breadth away from the 110.00 major psychological handle.

And if that’s not enough to get the bulls and bears’ attention, the area also marks the 61.8% Fibonacci retracement AND the top weekly ATR this week. On top of that stochastic’s lower highs are pointing to a possible bearish divergence.

USD/JPY 4-Hour Forex Chart
USD/JPY 4-Hour Forex Chart

But can the bears contain the bulls at 110.00 this week? Unless you were too busy fangirling over NSYNC’s reunion, you should know that the Fed is scheduled to publish its May policy decision today at 6:00 pm GMT.

Market players are expecting hawkish statements from Powell and his team. After all, the members have individually shared their hawkish remarks in the weeks leading up to the May decision.

If the Fed signals that they will raise rates in June as rate hike junkies are expecting, then we might see USD/JPY break above the 110.00 handle and maybe shoot for the 112.00 and 113.50 areas of interest.

But the Fed isn’t the only headline-maker this week. For one thing, China and the U.S. are scheduled to meet in Beijing this week. Not only that, but the NFP report is also right around the corner.

If these events churn out headlines that weaken the demand for the dollar, then we might see USD/JPY turn back down to previous resistance levels near 107.50.

Either way, USD/JPY looks like it’s in for strong moves depending on how it reacts to 110.00.

I’ll keep my eyes peeled for possible trading opportunities in the chart. I hope you are, too! Better yet, I hope you share your plans if you have any!

See also:
My Q1 2018 Forex Trade Review and Reflections
Latest version of the HLHB Trend-Catcher System

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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.