Fundamental view:

US dollar has lost its ground against the Japanese yen in this week. In Japan, National election on October 31 is almost guaranteed to return the Liberal Democratic Party (LDP) candidate, current Prime Minister Fumio Kishida, to office. He has promised new fiscal and monetary stimulus programs to revive the Japanese economy. On the other hand, The Federal Reserve is also moving toward raising rates – but that is likely only in the summer of 2022, according to bond markets.

Japan Trade Balance on 20th Oct and Japan Core CPI yearly report on 22nd Oct created bullish trend whereas US Fed Industrial Production yearly report on 18th Oct and US Markit Manufacturing PMI on 22nd Oct created bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are US CB Consumer Confidence Index at Oct 26, Japan Retail Sales monthly report, US Core Durable Goods Orders monthly report at Oct 27, BoJ Interest Rate Decision, US GDP quarterly report, US Initial Jobless Claims at Oct 28 and US Michigan Consumer Sentiment at Oct 29.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.17% higher than the previous week. Maintaining high at 114.70 and low at 113.41 showed a movement of 129 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading below the 50 Simple Moving Average and the MACD trades to the downside. A firm breakout below 113.03 may fall to 112.58 and may take a way down to 111.74. Should 114.32 prove to be unreliable resistance, the USDJPY may raise upwards 115.16 and 115.61 respectively.  In H4 chart, Formation of rounding top pattern indicates reversal of the trend creating prospects of a bearish trend Along with a dark cloud formation braces our expectation.