Fundamental view:

USD/JPY seems to be noisy in the past week. The outlook of the pair was dominated by the general trend lower in the US dollar. The weak dollar remained the default market mode in the past week. The Bank of Japan (BoJ) kept its base rate at -0.1% as universally expected and warned that the new COVID-19 measures could impact the recovery, saying that services spending will come under “strong downward pressure.” It raised the 2021 GDP estimate to 3.9% from 3.6%.Bank of Japan Governor Haruhiko Kuroda said he did not think the risk of deflation was high even as annual National CPI fell 1.2% in December, the third negative month in a row. He suggested that the bank had extended sufficient stimulus to ease the shock from the pandemic, at least for now.

Last week news, Japan Industrial Production on 18^th January and Japan CPI excl. Food and Energy yearly report and Core CPI yearly report on 22^nd January created bullish trend for the pair and US NAHB Housing Market on 20^th January and US Initial Jobless Claims on 21^st January created bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are BoJ Monetary Policy Meeting Minutes at Jan 25, US CB Consumer Confidence Index at Jan 26, Japan Retail Sales monthly report, US Core Durable Goods Orders monthly report, Fed Interest Rate Decision at Jan 27, US GDP quarterly report and US Initial Jobless Claims at Jan 28.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.30% lower than the previous week. Maintaining high at 104.09 and low at 103.33 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 upside. A solid breakout above 104.08 may open a clean path towards 104.46 and may take a way up to 104.84. Should 103.32 prove to be unreliable support, the USDJPY may sink downwards 102.95 and 102.56 respectively. In H4 chart, Formation of bullish crab pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish spinning top formation braces our expectation.