This pair is stuck in consolidation, as traders are likely weighing their bets ahead of tomorrow’s NFP.
Here are the potential breakout levels to watch.
Before moving on, ICYMI, yesterday’s watchlist looked at USD/CAD testing a key resistance level ahead of the FOMC minutes. 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:
U.S. final services PMI upgraded from 51.6 to 52.7 vs. 51.6 forecast
U.S. JOLTS job openings down from 11.86M to 11.25M
U.S. ISM services PMI dipped from 55.9 to 55.3 vs. 53.9 consensus
FOMC minutes: Sharply higher rates might be needed to quell inflation
FOMC staff lowered growth estimates for second half of 2022 and 2023
FOMC concurred that inflation outlook has deteriorated
API reports 3.825M barrel build in stockpiles versus estimated 1.1M draw
Japanese media reports Tokyo’s plans to tighten COVID-19 restrictions
Shanghai reports jump in COVID-19 cases, Beijing tightens vaccine requirements
Australia’s AIG services index down from 49.2 to 48.8
Australian trade surplus widened from 13.25B AUD to 15.97B AUD
Japanese leading indicators dipped from 102.9% to 101.4%
German industrial production posted 0.2% uptick vs. expected 0.3% gain
U.K. Halifax HPI showed 1.8% gain in house prices vs. expected 0.7% increase
Upcoming Potential Catalysts on the Forex Economic Calendar:
ECB monetary policy meeting accounts at 11:30 am GMT
U.S. Challenger job cuts at 11:30 am GMT
Canadian trade balance at 12:30 pm GMT
Canadian Ivey PMI at 2:00 pm GMT
FOMC members Bullard and Waller to testify at 5:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/JPY
The coast is clear in terms of top-tier economic events today, so I thought I’d take a look at this simple consolidation setup on USD/JPY.
The pair formed lower highs and higher lows to create a symmetrical triangle on the hourly time frame, and it looks like Friday’s NFP release might be a catalyst for a breakout.
If you’re planning on trading this report like I am, make sure you check out this June NFP trading guide!
USD/JPY is currently testing the triangle top, and technical indicators are hinting that resistance might hold again.
This could take the pair back down for a test of the triangle support or perhaps a breakdown. After all, the 100 SMA is below the 200 SMA to signal that the path of least resistance is to the downside while Stochastic is heading south.
A move below the triangle bottom around the 135.50 minor psychological mark could set off a drop that’s the same height as the chart pattern. That’s a little over 200 pips yo!
Make sure you keep tabs on leading U.S. jobs indicators, as well as shifts in market sentiment, if you’re trading this pair.
