Fundamental view:

The US dollar has gone back and forth during the course of the trading week to hang around the ¥109 level. Central banks dominated the market news this week but US yields controlled the action. The Bank of Japan (BOJ) widened the band for long-term rates to 0.25% around a 0% mid-point from the implicit 0.2% current range. The change is designed to give the BOJ’s yield curve control (YCC) policy greater flexibility. The bank also withdrew its guarantee to buy six trillion yen ($55.21 billion) of exchange-traded funds (ETF) annually. The bank also said it would only intervene when stock markets destabilize under the 12-trillion yen cap set during the pandemic panic last year.

Japan Core Machinery Orders on 15^th March and Japan Trade Balance on 17^th March favored bullish trend whereas US Retail Sales on 16^th March and  US EIA Natural Gas Storage Change on 18^th March favored bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Mar 22, BoJ Monetary Policy Meeting Minutes, Fed Chair Powell Testimony at Mar 23, Japan Markit Manufacturing PMI, US Core Durable Goods Orders monthly report at Mar 24, US GDP quarterly report at Mar 25, PCE Price Index at Mar 26.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.13% higher than the previous week. Maintaining high at 109.37 and low at 108.61 showed a movement of 76 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 downside. A solid breakout above 109.27 may open a clean path towards 109.70 and may take a way up to 110.03. Should 108.51 prove to be unreliable support, the USDJPY may sink downwards 108.18 and 107.75 respectively. In H4 chart, Formation of bullish bat pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish hammer formation braces our expectation.