In what has been a mild week on the forex, the USD/JPY is showing signs of life. Following Tuesday’s bullish breakout, today has brought reserved trade near the 111.50. A tight 44 pip range is all that has been produced, as sellers have dominated since an early-session failed auction above Tuesday’s high (111.64).

The coming U.S. overnight session is going to be dominated by primary market movers out of the U.K. If you are trading the British pound, be sure to stay tuned to FX Leaders for real-time analysis and insights facing the news items.

The USD/JPY is also likely to be impacted by a few secondary economic metrics from Japan. Foreign Bond Investment (September 7) and Machinery Orders (July) are two items that may drive USD/JPY valuations.

USD/JPY Technicals

The Double-Top formation (111.82-111.75) on the daily time frame is set up as viable topside resistance. Thus far this level has withstood two distinct challenges. Will it stand tall a third time?

Bottom Line: Until tomorrow’s release of U.S. CPI, this market is likely to remain in a consolidation phase. However, the Double-Top formation is only 35 pips away from current price levels. In the event that the coming metrics out of Japan stimulate a few bids to hit the market, then a pre-CPI release short may come into play.

Until the U.S. pre-market hours (8:30 AM EST) tomorrow, I will have sells queued up from 111.74 in the USD/JPY. Using an initial stop at 112.03, this trade produces 28 pips using a standard 1:1 risk vs reward management plan.