Fundamental view:

The US dollar has been somewhat negative during the trading week. This week’s Federal Reserve minutes has demonstrated once more that the market sensitivity to rate signals from the central bank and traders fears of missing the potential surge in interest rates and the dollar when that first notice of a change in policy arrives. Risk appetite play a crucial role in the market direction.

US NY Fed Empire State Manufacturing Index on 17^th May and US Building Permits on 18^th May favored bullish movement whereas Japan Capacity Utilization Rate on 19^th May and Japan Trade Balance on 20^th May favored bearish movement for the pair.

The major economic events deciding the movement of the pair in the next week are BoJ Governor Kuroda Speech, Fed Governor Brainard Speech at May 24, US CB Consumer Confidence Index at May 25, Japan Unemployment Rate, US GDP quarterly report, US Core Durable Goods Orders monthly report at May 27 and US Michigan Consumer Sentiment at May 28.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.40% lower than the previous week. Maintaining high at 109.34 and low at 108.57 showed a movement of 77 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 108.57 may open a clean path towards 108.18 and may take a way down to 107.80. Should 109.34 prove to be unreliable resistance, the USDJPY may raise upwards 109.72 and 110.11 respectively.  In H4 chart, chart formation of three falling peaks pattern favors prospects of a bearish trend Along with a bearish spinning top formation braces our expectation.