Holiday trading is always a challenge on the forex. Conditions are typically slow, featuring limited participation and tight trading ranges. In addition, bid/ask spreads are inconsistent, leading to slippage and other inefficiencies. At the very least, holidays aren’t the best time to pile on the risk.

However, today’s muted trade is very likely to heat up in the coming 24 hours. Below are the key events that are capable of spiking price action:

Country                            Event

Australia                           RBA Rate Statement

Eurozone                         ECB Lagarde Speech

Japan                                Monetary Base Report (YoY, August)

United States                  ISM Manufacturing PMI (August)

Be sure to stay tuned to FX Leaders for analysis and trading ideas as these events unfold.

A Slow Forex Session For The USD/JPY

Like most of the other majors, the USD/JPY has been in a relative holding pattern throughout the trading day. At press time (1:00 PM EST), rates are in heavy rotation near the 106.06 handle.

Here are the levels to watch going into Tuesday:

• Resistance(1): Daily SMA, 106.17
• Resistance(2): Bollinger MP, 106.34
• Resistance(3): Triple Top, 106.75

Bottom Line: The zone between 106.00 and 106.75 was like home to the USD/JPY for the majority of August. Two-way participation in this zone was robust, largely containing price action. Until proven otherwise, 106.00-106.75 is best respected as an important area of forex fair value. 

If we see bullish action in the USD/JPY, shorting the daily Triple Top pattern is solid trade location to the bear. Until elected, I will have sell orders in the queue from 106.69. With an initial stop at 107.06, this trade produces 30 pips on a sub-1:1 risk vs reward management plan.