Daily U.S. Session Watchlist: USD/JPY

 There are no major economic reports scheduled today, which means that traders will play the existing market themes as well as the closely-watched events scheduled in the next few days.

Will today’s price action make or break USD/JPY’s downtrend?

Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!

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

Fresh Market Headlines & Economic Data:

Angela Merkel’s top aide warned Germany might bar unvaccinated people from ‘restaurant, cinema and stadium visits’

France passes law that makes special Covid-19 passports, vaccines mandatory

Sydney’s lockdown could be extended for another six weeks despite mounting public anger

New Zealand Has NZ$261 million trade surplus in June

Japan’s July factory activity grows at slowest pace in 5 months – PMI

Bitcoin tops $39,000 for the first time in nearly 6 weeks, adding $114 billion to the crypto market

Asia stocks hit 2021 lows as China skids, funds favour Wall Street

Upcoming Potential Catalysts on the Economic Calendar:

Germany’s Ifo business climate at 8:00 am GMT

BOE’s voting MPC member Vlieghe to give a speech at 11:00 am GMT

U.S. new home sales at 2:00 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

Uncle Sam won’t be printing top-tier reports today, but that doesn’t mean that we won’t see volatile price action!

USD/JPY is a pair to watch as traders position their dollar bets ahead of this week’s FOMC statement and advance GDP reading.

In case you haven’t visited the grapevines yet, the word around is that JPow and his team will react to increased pressure to recognize that high inflation may not be as temporary as they initially thought. It also won’t help their accommodative plans if the first Q2 2021 GDP reading reflects the reopening of more businesses like markets are expecting.

Meanwhile, concerns of rising COVID-19 cases and lockdown prospects in major economies such as the Eurozone and Australia should keep the pro-dollar camp busy in the next trading sessions.

If traders start to price in a not-so-dovish FOMC statement or a strong GDP reading, then USD/JPY could find support from the 100 SMA on the 1-hour time frame and surpass last week’s highs. The 110.60 is the first resistance area to watch followed by the big 111.00.

If markets turn against the dollar, though, then USD/JPY may extend its weeks-long downtrend and revisit areas of interest like 109.90 or 109.60.

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