Dollar/yen has undergone a choppy week. Preliminary GDP and the rate decision are the main events in the upcoming week. Here is an outlook on the market movers ahead and an updated technical analysis for USD/JPY. Japan’s current account surplus shrank in March 34.3% from a year earlier after economists expected 31.2% fall with exports falling and imports rising after the earthquake and tsunami hit Japan. The situation could get worse with continuous power shortages damaging production. Nevertheless Japan’s economy is expected to recover sooner than originally estimated. USD/JPY daily chart with support and resistance lines marked. Click to enlarge: Let’s start: Core Machinery Orders: Monday, 0:50. Core machinery orders dropped 2.3% in February following 4.2% gain in January. The sharp cut is due to the decrease in production after the earthquake and tsunami devastated supply chains and hurt production. A sharp drop of 9.7% is predicted. Household Confidence: Monday, 6:00. Household sentiment plunged to 38.6 in March from 41.2 in February while a figure of 39.9 was expected. The huge disaster cases a downward spiral with lower spending causing a decrease in salaries and fewer jobs. A further drop to 37.3 is forecasted. Tertiary Industry Activity: Wednesday: 0:50. An index measuring the service industry activity in Japan moved up 0.8% in February following 0.1% drop in the previous month. This was above expectations for 0.1% increase. Industries which led the rise include wholesale and retail trade, transport and postal activities, scientific research, and finance and insurance. A sharp decrease of 5.4% is expected now. Prelim GDP: Thursday: 0:50. Japan’s economy is expected to contract significantly this year after the devastating earthquake and tsunami. GDP is expected to gain only 0.8% in 2011 after a growth forecast of 1.7% made in November last year. However, the devastating impact of the disaster is expected to last a limited time after which Japan will resume its expansion with growing reconstruction investments. A decrease of 0.5% is predicted. Revised Industrial Production: Thursday, 5:30. The industrial production decreased more than anticipated by 15.3% following the earthquake and Tsunami. Prodiction was suspended in many factories hit by the major disaster. On a yearly base Japan’s Industrial Production dropped to -12.9%, following 2.9% in the previous year while the expectations estimated of -8.5%. The disaster’s effect on the economy has been noticeably stringer than previously thought. A slight improvement to -15.1% is expected. Rate Decision: Friday. The BOJ kept monetary policy unchanged and the overnight rate maintained in April after it lowered its growth forecast for the current fiscal year and announced that the impact of the devastating earthquake on Japans economic outlook is larger than first anticipated. However Bank of Japan Governor Masaaki Shirakawa did not specify the means it will take to support the economy. Overnoght rate is expected to remain 0.10%. All Industries Activity: Friday: 5:30. All Industries Activity rose 0.7% while expected to gain 0.4% following a drop of 0.5% in the previous month. A decrease of -5.5% is predicted. *All times are GMT USD/JPY Technical Analysis: After making a dive under the 80.40 line (discussed last week), the pair recovered and peaked twice at 81.33, before closing at 80.80, very close to the previous close. Technical levels from top to bottom: 85.50 is the top line – being the highest level in 2011 after the big intervention. It was reached after the stubborn line of 84.50 was broken. 84.50 capped the pair at the end of 2010. 84 was a lower peak before the March 11 catastrophe and minor resistance now. 83.40 is another weak line after capping the pair just before the disaster and also working as support a few months earlier. 82.87 was the trough before the BOJ intervention in September 2010 and also played an important role now as the peak of a recovery attempt. 82 is now a minor line, after being shattered too many times in recent weeks, but it’s still of importance after working in both directions. 81,33 is a new line on the graph – it was a double top just now and serves as immediate resistance. Strong support is at the 2010 low of 80.40, which was encountered now and although being slightly weaker, will still slow any fall. 79.75 is the historic low of 1995 and played a critical role when the pair collapsed in March. The current false break shows that it’s weaker, but shouldn’t be underestimated. 79.16 is minor resistance as well, followed by 78.27 – both were significant before the big intervention. I am bullish on USD/JPY. With the dollar reaching a bottom against other currencies, some positive signs from the US, and a weakening Japanese economy, the pair has enough reasons to rise. The GDP release is a key event. Further reading: For a broad view of all the week’s major events worldwide, read the USD outlook. For EUR/USD, check out the Euro/Dollar forecast. For GBP/USD (cable), look into the British Pound forecast. For the Australian dollar (Aussie), check out the AUD to USD forecast. For the New Zealand dollar (kiwi), read the NZD forecast. For USD/CAD (loonie), check out the Canadian dollar. Anat Dror Anat Dror Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer Anat's Google Profile View All Post By Anat Dror MajorsUSD JPY Forecast share Read Next USD/CAD Outlook – May 16-20 Anat Dror 12 years Dollar/yen has undergone a choppy week. Preliminary GDP and the rate decision are the main events in the upcoming week. Here is an outlook on the market movers ahead and an updated technical analysis for USD/JPY. Japan's current account surplus shrank in March 34.3% from a year earlier after economists expected 31.2% fall with exports falling and imports rising after the earthquake and tsunami hit Japan. The situation could get worse with continuous power shortages damaging production. Nevertheless Japan's economy is expected to recover sooner than originally estimated. USD/JPY daily chart with support and resistance lines marked. 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