Technical Outlook: The USDJPY currency pair stalled the rally as price action hit the resistance level of 110.91 – 110.66. Given this strong resistance level, USDJPY is most likely to post a short term correction in price. The support is seen initially at 109.97 which could be tested to the downside. There is a possibilty that USDJPY could maintain a sideways range within these levels. A break down below 109.97 could indicate further losses and result in a stronger correction. The next support level below 109.97 is seen at 109.14. To the upside, further gains can be expected only on a strong close above the current resistance level.
Fundamental Outlook: Economic data from Japan is quite limited. Data includes the flash manufacturing PMI from the region covering the month of May. Later in the week, the BoJ’s measure of inflation, the core CPI will be released. This data will be closely watched as investors assess if the pace of economic growth was strong or not. The BoJ, at its recent monetary policy meeting had disclosed that it would not give a time frame for achieving the 2% inflation target. A better than expected core CPI measure could however boost expectations that the BoJ could potentially be looking into tightening its monetary policy stimulus program.
USDJPY Weekly Forex Forecast – 21st to 25th May 2018
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