Fundamental view:

Greenback dropped against the Japanese yen in the last week due to the sharp decline witnessed in the US Treasury bond yields and the broad-based USD weakness. Federal Reserve policy is also undetermined. Several bank officials, including Vice-Chair Richard Clarida, made a suggestion that a reduction in the amount of bond purchases may be nearing. The Fed’s contention that the recent inflation spike is temporary will be discussed at the August 26-28 annual Jackson Hole symposium, but whether the conclave will produce a consensus for the FOMC meeting a month later is highly speculative.

Japan Economy Watchers Index for Current Conditions on 10th August and Japan BoJ L Money Stock yearly report on 11th August created uptrend whereas Japan BoJ Corporate Goods Price Index monthly report on 12th August and US Export Price Index monthly report on 13th August created downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan Industrial Production monthly report, US NY Fed Empire State Manufacturing Index at Aug 16, US Retail Sales monthly report, US Fed Industrial Production monthly report at Aug 17, FOMC Minutes at Aug 18, Japan Core CPI yearly report, US Philadelphia Fed Manufacturing Index and US Initial Jobless Claims at Aug 19.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.41% higher than the previous week. Maintaining high at 110.80 and low at 109.55 showed a movement of 125 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 110.41 may open a clean path towards 111.23 and may take a way up to 111.66. Should 109.16 prove to be unreliable support, the USDJPY may sink downwards 108.73 and 107.91 respectively. In H4 chart, Formation of bullish crab pattern indicates prospects of a bullish trend Along with a hammer formation brace our expectation.