USD/JPY Weekly Forecast (07th February 2022 – 11th February 2022)

Fundamental view:

US dollar traded low against the Japanese yen during the first four trading days but bounced up on Friday with surprise NFP data. The Bank of England and the European Central Bank hawkish stance on rate hike made their currencies stronger against the US dollar. USD/JPY reached its week’s low on Wednesday after BoE meeting and downbeat US ADP data. The Central bank policymaker’s hesitance about the rate hike also weighed on the US dollar. (BoE) raised its Bank Rate 0.25% to 0.5%, its second consecutive increase. Meanwhile, Christine Lagarde, President of the European Central Bank (ECB), provided another surprise when she noted that inflation on the continent had increased and rate hikes this year were not ruled out. Amidst all the catalysts weighing, US dollar had a downtrend.

The Dollar came back on Friday with upbeat NFP data. US managed to add 467K new job positions, which is very high than the expectation of -192k. Meanwhile The Unemployment Rate ticked higher to 4%, while the Participation Rate jumped to 62.2%, signaling quite a healthy recovery in the sector. This helped in the bounce back of the US dollar.

Japan Retail Sales monthly report on 31^st January, US Initial Jobless Claims on 3^rd February and Nonfarm Payrolls on 4^th February created bullish momentum whereas Japan Markit Manufacturing PMI and US ISM Manufacturing PMI on 1^st February and US ADP Nonfarm Employment Change on 2^nd February created bearish momentum for the pair.

The major economic events deciding the movement of the pair in the next week are BoJ Board Member Nakamura Speech, BoJ Corporate Goods Price Index monthly report, US EIA Crude Oil Stocks Change, US WASDE Report at Feb 09, Initial Jobless Claims, Federal Budget Balance at Feb 10 and Michigan Consumer Sentiment at Feb 11.  

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.08% lower than the previous week. Maintaining high at 115.59 and low at 114.15 showed a movement of 144 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 115.84 may open a clean path towards 116.43 and may take a way up to 117.28. Should 114.40 prove to be unreliable support, the USDJPY may sink downwards 113.55 and 112.96 respectively. In H4 chart symmetrical triangle pattern breakout upside favors prospects of a bullish trend. Also to be noted three inside up formation exerts the expectation of uptrend for the pair.