Fundamental view:

The US dollar has driven higher during the course of the week. The greenback has rallied significantly during the course of the week to break above the ¥110 level. Treasury Secretary Janet Yellen said that inflation would remain elevated through 2021 whereas Dallas Fed President Robert Kaplan noted that improving labor markets might warrant taper talks. These comments have supported  the dollar.On the other hand, Rising Covid-19 cases in parts of Japan, various pandemic control measures and the slow vaccination rollout has put pressure on the yen.

US New Home Sales on 25^th May and US Michigan Current Conditions on 28^th May favored downtrend whereas Japan Coincident Index & Japan Leading Index on 26^th May and US Pending Home Sales yearly report on 27^th May favored uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are OPEC Meeting, Japan Markit Manufacturing PMI, US ISM Manufacturing PMI at Jun 01, BoJ Board Member Adachi Speech, US ADP Nonfarm Employment Change, US EIA Crude Oil Stocks Change Jun 03, Fed Chair Powell Speech and US Nonfarm Payrolls at Jun 04.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.64% higher than the previous week. Maintaining high at 110.19 and low at 108.55 showed a movement of 164 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 110.48 may open a clean path towards 111.16 and may take a way up to 112.12. Should 108.84 prove to be unreliable support, the USDJPY may sink downwards 107.88 and 107.20 respectively. In H4 chart, Formation of ascending scallop pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.