Forex
US Dollar Price Action Sets Stage for Potential Counter-Trend Setup
The US Dollar's price action is being closely watched as expectations for at least 25 bps of hikes into the end of the year remain high, with a greater than 50% chance of seeing that at next Wednesday's FOMC rate decision.
One key market to watch is USD/JPY, which has been driven by US CPI prints over the past four years. The pair has seen significant moves in response to these prints, including a sell-off of over 2,000 pips in November 2022 after a below-expected US CPI print.
With Friday's release of CPI data looming, there is potential for a counter-trend setup in USD/JPY as the daily bar has shown an elongated underside wick. If the daily bar closes as a hammer or dragonfly doji, it could open the door to a bounce.