Fundamental view:

US dollar traded low against the Japanese yen during the trading course of the week. Discovery of coronavirus new variant Omicron created sour market sentiment. This might have created risk aversion market sentiment, in turn favoring the safe haven – Japanese yen. Omicron case reports began to arise  from various countries and US states, even though there were no indications of heightened danger or vaccine avoidance from the new strain. Preliminary observations from the doctor in South Africa who identified the first mutated virus noted the cases she had seen were all mild without complications. On the other hand, Japanese economic information was mixed. Retail Trade (sales) was slightly weaker than forecast for the year in September, though purchases at large stores were just 0.9%, less than a fifth of the 5.2% estimate. Industrial Production in October was weaker than predicted and the annual change was -4.7%, its worst reading since January. 

Fed Chair Powell Testimony on 30^th November and US ISM Manufacturing PMI on 1^st December favored uptrend for the pair whereas Japan Retail sales monthly report on 29^th November and Japan Industrial Production monthly report on 30^th November favored downtrend for the pair this week.

The major economic events deciding the movement of the pair in the next week are Japan GDP quarterly report, US Nonfarm Productivity quarterly report at Dec 7, BoJ Corporate Goods Price Index monthly report, EIA Crude Oil Stocks Change at Dec 08, Initial Jobless Claims at Dec 09, Michigan Consumer Sentiment and US Federal Budget Balance at Dec 10.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 1.38% lower than the previous week. Maintaining high at 113.95 and low at 112.53 showed a movement of 142 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 downside. A solid breakout above 113.61 may open a clean path towards 114.49 and may take a way up to 115.03. Should 112.19 prove to be unreliable support, the USDJPY may sink downwards 111.65 and 110.77 respectively. In H4 chart, Formation of falling wedge pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.