Technical Outlook: USDJPY formed an inside bar on Friday's close as the dollar maintained strong gains against the yen. Price action is currently trading within the 118.00 - 116.80 resistance level where the Stochastics oscillator on the daily chart shows a hidden bearish divergence on the long term and even on the weekly charts. A reversal off this level cannot be ruled out which could signal a near term decline in USDJPY towards 111.27 support. Below this main support level, price could extend the declines to 106.50 - 107.00. Fundamental Outlook: The Japanese yen will be looking to the BoJ's meeting next week amid a slow trading week. On Tuesday, the Bank of Japan's monetary policy meeting is expected to see no changes to monetary policy. The key policy rate is expected to remain unchanged at -0.10% with the central bank’s bond purchase program staying intact. With the yen weakening on the back of a strong U.S. dollar and a strong monetary policy divergence, BoJ policymakers are likely to keep this meeting low key. However there could be some reaction from the yen as the BoJ leaves policy steady which could see short term strength in the yen. USDJPY has been rising steadily and is well overdue for a correction to the downside. Previous USDJPY Weekly Forex Forecast  

USDJPY Weekly Forex Forecast - 19th to 23rd Dec 2016 - Bearish