Fundamental view:

The US dollar initially fell during the course of the week, but then turned around to show signs of strength. Demand for the American currency surged mid-week, amid hopes things will start falling into place this year. Coronavirus immunization through different vaccines lifts odds for an economic comeback in the second semester of the year, while unprecedented monetary stimulus has chances of being increased. Finally, and after some turmoil in the US, President Donald Trump announced an upcoming “orderly transition” on January 20.

In the last week, Japan Markit Manufacturing PMI on 4^th January and Japan BoJ Monetary Base yearly report on 5^th January favors downward movement whereas Japan Consumer Confidence Index on 6^th January and Japan Labor Cash Earnings yearly report & Real Wage yearly report on 7^th January favors upward movement for the pair.

The major economic events deciding the movement of the pair in the next week are US JOLTS Job Openings at Jan 12, BoJ Corporate Goods Price Index monthly report, US CPI monthly report at Jan 13, US Initial Jobless Claims, Fed Chair Powell Speaks at Jan 14, Japan Tertiary Industry Activity Index monthly report, and US Retail Sales monthly report at Jan 15.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.19% higher than the previous week. Maintaining high at 104.09 and low at 102.59 showed a movement of 150 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 104.46 may open a clean path towards 105.02 and may take a way up to 105.95. Should 102.96 prove to be unreliable support, the USDJPY may sink downwards 102.03 and 101.46 respectively. In H4 chart, Formation of rounding bottom pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish hammer formation braces our expectation.