Weekly Forecast

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USD/JPY Weekly Forecast (2nd May 2022 – 6th May 2022)

Apr 30, 2022 05:36


Fundamental view:

The US dollar climbed higher against its yen counterpart during the trading course of the week. The monetary policy divergence between the Fed and the BOJ is the major catalyst behind the USD/JPY bulls. The US dollar was the most sought currencies due to the aggressive rate hike expectation from the fed. The US Federal Reserve has already lifted the main benchmark to a 0.25%-0.50% range and would likely take it to around 2.75% by year-end.  On the other hand, the BOJ pledged to defend its zero rate policy with unlimited government bond purchases, falling further out of step with its central bank colleagues around the world. 

Further, the worries of supply chain constraints due to the china’s lockdown and the geopolitical tension weighed on the consumer sentiment. In times of uncertainty and market unrest, investors took refuge in the ultimate safe-haven, the dollar.

In this week, US EIA Crude Oil Stocks Change on 27th April and Japan Industrial Production monthly report on 28th April underpinned bearish trend whereas Core Durable Goods Orders monthly report on 26th April and BoJ Interest Rate Decision on 28th April underpinned bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are au Jibun Bank Manufacturing PMI, US ISM Manufacturing PMI at May 02, US ADP Nonfarm Employment Change, US ISM Non-Manufacturing PMI, EIA Crude Oil Stocks Change, Fed Interest Rate Decision at May 04, Tokyo CPI yearly report and Nonfarm Payrolls at May 06.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 1.43% higher than the previous week. Maintaining high at 131.25 and low at 126.95 showed a movement of 430 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 131.66 may open a clean path towards 133.60 and may take a way up to 135.96. Should 127.36 prove to be unreliable support, the USDJPY may sink downwards 125.00 and 123.06 respectively. In H4 chart, Formation of ascending scallops pattern indicates continuation of the trend creating prospects of a bullish trend Along with a hammer formation braces our expectation.

Buy: 129.71 target at 133.59 and stop loss at 127.31


Alternate Scenario
Sell: 127.31 target at 123.82 and stop loss at 129.71
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