Fundamental view:

The US dollar has rallied a bit during the course of the week and reached the 109.78 high, Wednesday’s inflation report made a foster run in Treasury interest rates, though well within this year’s range, helped USD/JPY to give its best session since starting of this year. Bank of Japan Governor Haruhiko Kuroda did not help the yen as he warned of the continuing impact of the pandemic in Japan, pledging to maintain the bank’s accommodative monetary policy. Kuroda said in the last week “Economic activity will remain below pre-pandemic levels for the time being,” “Risks to the economic outlook are skewed to the downside.” 

Japan Current Account n.s.a. on 13^th May and  US Import Price Index monthly report on 14^th May helped in creation of bearish trend whereas US CB Employment Trends Index on 10^th May and US JOLTS Job Openings on 11^th May helped in created of bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan GDP quarterly report at May 17, US Building Permits at May 18, Japan Industrial Production monthly report, US EIA Crude Oil Stocks Change, FOMC Minutes at May 19, US Initial Jobless Claims, Philadelphia Fed Manufacturing Index at May 20 and US Existing Home Sales at May 21.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.0.9% higher than the previous week. Maintaining high at 109.79 and low at 108.35 showed a movement of 144 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout below 108.53 may open a clean path towards 107.72 and may take a way down to 107.09. Should 109.97 prove to be unreliable resistance, the USDJPY may raise upwards 110.60 and 111.41 respectively.  In H4 chart, Formation of bearish butterfly pattern indicates reversal of the trend creating prospects of a bearish trend Along with a bearish harami formation braces our expectation.