Fundamental view:

US economic growth is expected to be twice as fast as Japan’s and that prospect has been a main support for the dollar. Japan’s central bank left its base rate unchanged at 0.1% in its decision on Friday while reducing its 2021 growth estimate to 3.8% from 4%. The Fed’s 2021 projection had climbed to 7% from 6.5% in its forecasts updated on June 16. BOJ Governor Haruhiko Kuroda told the news conference following the policy announcement. “Japan’s economy is likely to gradually recover as vaccinations progress and the impact of the pandemic subsides.”

Japan BoJ Corporate Goods Price Index monthly report on 12th July and US EIA Gasoline Stocks Change on 14th July created a downtrend whereas US Core CPI monthly report on 13th July and US Core Retail Sales monthly report on 16th July created an uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan Core CPI yearly report at July 19, BoJ Monetary Policy Meeting Minutes, US Building Permits at July 20, US EIA Crude Oil Stocks Change at July 21, US Initial Jobless Claims, US CB Leading Economic Index monthly report at July 22 and US Markit Manufacturing PMI at July 23.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.44% lower than the previous week. Maintaining high at 110.69 and low at 109.71 showed a movement of 98 pips.

In the upcoming week we expect USD/JPY to show a bullish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 110.59 may open a clean path towards 111.13 and may take a way up to 111.57. Should 109.61 prove to be unreliable support, the USDJPY may sink downwards 109.17 and 108.63 respectively. In H4 chart, Formation of ascending and inverted scallop pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.