Fundamental view:

The US dollar initially fell during the course of the week against the Japanese yen but then turned around to show signs of strength again. Covid cases are edging higher in Japan, including in Tokyo, where the delayed Olympic Games have begun. Reports about athletes and other officials testing positive are also coming in. Still, surveys show locals are wary the Games could bring in more variants and turn into a super-spreader event. The capital remains under a state of emergency. On the other hand, Coronavirus infections are rising in the US – mostly in under-vaccinated areas, but now in all 50 states, dampening prospects of tighter policy from the Fed.

US NAHB Housing Market Index on 19th July and US Initial Jobless Claims on 22nd July created downtrend whereas Japan Adjusted Trade Balance on 21st July and US Markit Manufacturing PMI on 23rd July created uptrend for pair.

The major economic events deciding the movement of the pair in the next week are BoJ Governor Kuroda Speech, US Core Durable Goods Orders monthly report, US CB Consumer Confidence Index at July 27, Fed Interest Rate Decision at July 28, Japan Retail Sales monthly report, Japan Industrial Production monthly report, US GDP quarterly report, US Initial Jobless Claims at July 29 and US Michigan Consumer Sentiment at July 30.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.10% lower than the previous week. Maintaining high at 110.59 and low at 109.06 showed a movement of 153 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 111.07 may open a clean path towards 111.60 and may take a way up to 112.60. Should 109.54 prove to be unreliable support, the USDJPY may sink downwards 108.54 and 108.01 respectively. In H4 chart, Formation of extended-w pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.