USDJPY Weekly Forex Forecast – 2nd to 6th Jan 2017

Technical Outlook: USDJPY has failed to breakout above 118.00 over the past few weeks and the price action is indicative of a correction lower. Support at 111.27 comes in as the first level of support that could hold the prices. USDJPY could remain range bound below 118.00 – 111.27 resistance and support levels in the near term. Price action is starting to look increasingly weaker and any upside gains can come only on a convincing close above 118.00 resistance level. Below 111.27 support, USDJPY has the potential to dip towards 106.90 – 106.60 lower support level. This bearish view is also seen by the bearish divergence on the 4-hour Stochastics.

Fundamental Outlook: While the markets head off a busy week, data from Japan is limited to the Markit’s service PMI and the Nikkei manufacturing PMI numbers for December. The yen is therefore likely to take cues from the U.S. economic data next week which includes key releases such as the ISM’s manufacturing and non-manufacturing PMI figures as well as the FOMC meeting minutes and Friday’s non-farm payrolls report. All of the data is likely to weigh on the sentiment but with the dollar already posting strong gains, there is a strong risk of a decline in the near term.

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USDJPY Weekly Forex Forecast – 2nd to 6th Jan 2017 – Bullish