Fundamental view:

US dollar rallied against the Japanese yen during the trading course of the week. The US policymakers are hopeful of reaching an agreement over the Build Back Better (BBB) whereas Japanese diplomats cheer record budget and show readiness to battle the pandemic. Elsewhere, Authorities from Japan have recently suggested further easy money policies while citing the Omicron woes and rejecting inflation fears. Meanwhile, Omicron cases seem to rise both in US and Japan However, traders seem to be confident about the global recover with diminishing fear of Omicron.

In this week, Japan retail sales monthly report on 27^th December and Japan Industrial Production monthly report on 28^th December favored bearish trend whereas EIA Crude Oil Stocks Change on 29^th December and US Continuing Jobless Claims on 30^th December favored bullish trend.

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 Jan 04, US ADP Nonfarm Employment Change, EIA Crude Oil Stocks Change, FOMC Minutes at Jan 05, Japan Markit Services PMI, Initial Jobless Claims at Jan 06 and US Nonfarm Payrolls at Jan 07.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.62% higher than the previous week. Maintaining high at 115.22 and low at 114.31 showed a movement of 91 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 115.42 may open a clean path towards 115.77 and may take a way up to 116.33. Should 114.51 prove to be unreliable support, the USDJPY may sink downwards 113.95 and 113.60 respectively. In H4 chart, Formation of bullish pennant chart pattern indicates reversal of the trend creating prospects of a bullish trend Along with a hammer formation braces our expectation.