Fundamental view:

The US dollar has rallied significantly during the course of the week. As per the previous week report, In light of ADP’s 174,000 new workers on a 49,000 forecast and after an excellent week of US January statistics, including Manufacturing Employment PMI at an 18-month high and Jobless Claims at a nine-week low, data suggested a much more vibrant and expansionary economy than would have been considered possible a few weeks ago.

Japan Markit Manufacturing PMI on 1st Feb and US ISM-NY Business Conditions Index on 2^nd Feb created bearish trend whereas US Markit Composite PMI on 3^rd Feb and US Unit Labor Costs quarterly report on 4^th February created bullish trend for the pair.

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

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.79% higher than the previous week. Maintaining high at 105.77 and low at 104.61 showed a movement of 116 pips.

In the upcoming week we expect USD/JPY to show a bullish trend. The currency pair is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 105.86 may open a clean path towards 106.40 and may take a way up to 107.02. Should 104.70 prove to be unreliable support, the USDJPY may sink downwards 104.08 and 103.54 respectively. Chart formation of bullish pennant pattern in H4 chart favors prospects of a bullish trend. Bullish engulfing pattern formation escalates the expectation for a bullish trend.