Fundamental view:

The US dollar has initially fallen during most of the week to reach down towards the ¥105 level again. This is an area that has been supportive in the past, and now that it has been recaptured that it is going to see a lot of choppiness. This is due to the fact that there are two major drivers of this currency pair most of the time, and that is risk appetite and the 10 year yields of both countries.

US NFIB Small Business Index on 13^th October and US Core PPI monthly report on 14^th October made a bullish environment for the pair whereas Japan Core Machinery Orders monthly report on 12^th October favored bearish atmosphere for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Oct 19, US Building Permits at Oct 20, Core CPI yearly report, US Initial Jobless Claims at Oct 22, Japan and US Markit Manufacturing PMI at Oct 23.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.36% lower than the previous week. Maintaining high at 105.73 and low at 105.03 showed a movement of 69 pips.

In the upcoming week we expect USD/JPY to show a bullish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 105.74 may open a clean path towards 106.08 and may take a way up to 106.43. Should 105.05 prove to be unreliable support, the USDJPY may sink downwards 104.69 and 104.35 respectively. In H4 chart, Formation of Inverse Head and Shoulders indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.