Fundamental view:

The US dollar rallied against the Japanese yen during the trading course of the week. Headlines of Russia – Ukraine crisis dominated the financial markets, however it did not show any peace talks progress.  US Federal Reserve monetary policy decision also acted as a major catalyst in driving the market which helped the US dollar. As per expectation, the world’s most powerful central bank hiked key interest rates by 25 bps, by lifting the target range to 0.25%-0.50%. The Fed’s dot plot chart threw a hawkish surprise by showing six more rate increases this year while Chair Jerome Powell said that every meeting is a live meeting.

On the other hand, The Bank of Japan confirmed on Friday what the market has known for some time–the yen will receive little or no support from domestic rate policy in the near future. “Monetary easing is needed to support Japan’s economy halfway through recovery from the pandemic,” said BoJ Chief Haruhiko Kuroda in his press conference after the rate decision. 

In this week, Japan Trade balance on 16^th March and  US Initial Jobless Claims on 17th March favored downtrend whereas US PPI monthly report on 15th March and Japan CPI excl. Food and Energy yearly report on 18th March favored uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Mar 21, BoJ Monetary Policy Meeting Minutes, EIA Crude Oil Stocks Change at Mar 23, Japan Markit Manufacturing PMI, US Core Durable Goods Orders monthly report, Initial Jobless Claims at Mar 24, Michigan Consumer Sentiment and Fed Governor Waller Speech at Mar 25.  

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 1.72% higher than the previous week. Maintaining high at 119.40 and low at 117.31 showed a movement of 209 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. Should 117.83 proves to be unreliable support then the pair may fall further to 116.52 and 115.74 respectively whereas a solid breakout above 119.92 will open a clear path upward to 120.70 and then will further raise up to 122.01. In H4 chart, Formation of bearish three drives pattern indicates reversal of the trend creating prospects of a bearish trend Along with a bearish harami formation braces our expectation.