We won’t see a lot of top-tier economic releases in the next couple of hours but that doesnt’ mean we won’t see volatility!
Today I’m looking at USD/JPY as it trades near an established short-term resistance.
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:
Resurgence of COVID-19 cases drags Japan’s economy by another 0.8% (3.0% annualized) in Q3 2021
Rightmove: UK house prices post largest monthly price drop since January, expects price trend to be short-lived
China retail sales up by 4.9% y/y in Oct, the highest in three months
China industrial output accelerates from 3.1% to 3.5% in October
China stocks close lower as slowing property sector clouds outlook
BOJ Gov. Kuroda: Economy to return to pre-COVID levels, inflation to accelerate to 1% in H1 2022
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s trade balance at 10:00 am GMT
Canada’s manufacturing sales at 1:30 pm GMT
Canada’s wholesale sales at 1:30 pm GMT
U.S. NY manufacturing index at 1:30 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
With not a lot of top-tier economic releases scheduled in the next few hours, traders will likely start to position themselves ahead of this week’s potential catalysts.
The U.S. retail sales data should get tons of attention especially after inflation hit the 6% mark in October.
I got my eyes on USD/JPY because it’s trading just under the 114.25 mark that has been limiting the dollar’s gains since October.
Expectations of a weak U.S. retail sales release would translate to less pressure on the Fed to speed up its tightening plans.
USD/JPY could break below its Head and Shoulders pattern on the 1-hour time frame and hit the 113.50 zone closer to the 100 and 200 simple moving averages.
On the other hand, talks of a strong retail sales report or a bit of risk-taking after China’s better-than-expected data dump earlier today could push USD/JPY back to its range resistance levels.
MarketMilk’s USD/JPY average volatility calculator tells me that the pair moves by an average of 63 pips on Mondays so I know that a trip to the 114.25 range resistance or 113.50 mid-range zone are both possible.
