Technical Outlook: The USDJPY extended strong declines last week after price action briefly touched the resistance level near 113.50 level. The declines could now be seen extending to the 112.07 handle where support is likely to be tested.  The previous test to this support was met with prices bouncing off strongly. We therefore expect to see a more firm retest of the support level here. In the short term, USDJPY could be seen maintaining the sideways trend within 113.50 handle and 112.07 support. With the Stochastics oscillator in the oversold area, price action could be seen bouncing off in the short term but the gains are likely to be limited. Fundamental Outlook: Economic data from Japan for the week ahead is relatively quiet. Details include only the bank lending data on Monday followed by the final manufacturing PMI report for December. Manufacturing activity is expected to remain steady. However, a beat on the estimates cannot be ruled out especially after the recent Tankan manufacturing report showed that Japanese firms were upbeat on the global economy and trade. The USDJPY will be looking to the global developments as well which could impact the sentiment in the yen. Previous USDJPY Weekly Forex Forecast

USDJPY Weekly Forex Forecast - 1st to 5th Jan 2018