Fundamental view:

US dollar has rallied against the yen in the past week. The Japanese economic data was mixed with slightly better than forecast Retail Trade in April offset by a weaker than expected Tankan Manufacturing Survey for the second quarter. One bright spot was All Industry Capex (capital investment) which rose to 9.6% from 3% in the first quarter whereas US nonfarm payroll release was the trendsetter for the US dollar.

US Dallas Fed Manufacturing Index on 28th June and Japan Retail Sales yearly report on 29th June created bearish trend whereas Japan Industrial Production monthly report on 30th and US Pending Home Sales m/m & US EIA Crude Oil Stocks Change on 30th June created a bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan Markit Services PMI at July 05, US ISM Non-Manufacturing PMI at July 06, FOMC Minutes at July 07, Japan Economy Watchers Index for Current Conditions, US Initial Jobless Claims, US EIA Crude Oil Stocks Change at July 08 and US Wholesale Inventories monthly report at July 09.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.49% higher than the previous week. Maintaining high at 111.65 and low at 110.41 showed a movement of 124 pips.

In the upcoming week we expect USD/JPY to show a bullish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 111.64 may open a clean path towards 112.26 and may take a way up to 112.88. Should 110.40 prove to be unreliable support, the USDJPY may sink downwards 109.78 and 109.16 respectively. In H4 chart, Formation of bullish butterfly pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.