Fundamental view:
USD/JPY seems to be noisy in the past week. The outlook of the pair was dominated by the general trend lower in the US dollar. The weak dollar remained the default market mode in the past week. The Bank of Japan (BoJ) kept its base rate at -0.1% as universally expected and warned that the new COVID-19 measures could impact the recovery, saying that services spending will come under “strong downward pressure.” It raised the 2021 GDP estimate to 3.9% from 3.6%.Bank of Japan Governor Haruhiko Kuroda said he did not think the risk of deflation was high even as annual National CPI fell 1.2% in December, the third negative month in a row. He suggested that the bank had extended sufficient stimulus to ease the shock from the pandemic, at least for now.
Last week news, Japan Industrial Production on 18th January and Japan CPI excl. Food and Energy yearly report and Core CPI yearly report on 22nd January created bullish trend for the pair and US NAHB Housing Market on 20th January and US Initial Jobless Claims on 21st January created bearish trend for the pair.
The major economic events deciding the movement of the pair in the next week are BoJ Monetary Policy Meeting Minutes at Jan 25, US CB Consumer Confidence Index at Jan 26, Japan Retail Sales monthly report, US Core Durable Goods Orders monthly report, Fed Interest Rate Decision at Jan 27, US GDP quarterly report and US Initial Jobless Claims at Jan 28.
USD/JPY Weekly outlook: