Trade woes weighing on the currency, of course.

There has been plenty of ‘no going beyond 7’ talk in the weeks and months past … but fresh tariffs from the US President is changing perceptions. Mid 6.98s for it now.

The minor dead cat bounce ahead of the Fed is proving to be short-lived as the falling knife continues in cable. The drop here is more to do with the pound than the dollar advancing and it is the first time the pair has fallen below 1.2100 since January 2017.

The next key spot to watch out for now is the 1.2000 handle with the BOE to be in focus in just about an hour from now.

Early last week it looked like the Australian dollar was breaking out as it hit at three-month high. Instead, it’s resulted in a brutal turnaround and 8 straight days of declines.

The pain extended today in the past few minutes as AUD/USD fell to a session low at 0.6871 — the worst since June 19.

This is really a story about the Fed.

Falling rate cut expectations are giving the US dollar a boost while stoking worries about global growth.

Technically, the way the pair broke through the mid-July low is a negative sign. It will need to show some kind of life ahead of the June low of 0.6832.

Excluding the flash crash at the start of the year, that level matched the 2016 low and is a huge level. Given that we’re near oversold levels, and that support is nearby, there is a case for buying the Aussie but a better trade might be to wait and sell on a break lower.

The Japan employment report and industrial production data will be released at 2330 GMT and 2350 GMT respectively.  Later, the 2-day Bank of Japan meeting will conclude. The BOJ is expected to keep rates unchanged.

The USDJPY is trading near the high for the week at 108.893. That is just below the 38.2% retracement of the move down from the April 24 high at 112.389. That retracement level comes in at 108.918. The high for July reached 108.985 on July 10. The 108.92 to 109.00 is a key area for the bulls and bears through the data and rate decision. A move above would be more bullish, with the topside channel trendline cutting across at 109.14.

On the downside, the move below the 108.72 level, could see more selling momentum with a lower channel trend line 108.52 (and rising) as a level that would need to be broken to solicit more selling.