USD/JPY remained in range and closed the week almost unchanged, as safe haven flows balanced upside pressure. The first release of GDP is the highlight of this busy week. Here’s an outlook for the Japanese events and an updated technical analysis for USD/JPY. Last week Japan’s current account surplus narrowed to a seasonally adjusted 785.5bn in February from 856.2bn in January. The current account for 2011 fell 52.6% due to stronger energy imports following Japan’s Earthquake/Tsunami and subsequent nuclear disaster. Nevertheless, the trade account is expected to improve in 2012 despite the continuation in energy imports in light of the country’s income surplus. Updates: CGPI came in at 0.2%, exactly as predicted by the markets. US/JPY continues to trade below the 80 level, and was trading at 79.92. Household confidence edged down, posting a reading of 40.0 points. This was below the market forecast of 40.9. Core Machinery Orders declined by 2.8%, although this was better than the market estimate of a 3.4% loss. Tertiary Industry Activity also disappointed, falling 0.6%. The market forecast called for a drop of 0.3%. The Japanese yen weakened, climbing above the 80 level. USD/JPY was trading at 80.42. Prelim GDP posted a healthy increase of 1.0%, up a notch above the market forecast of 0.9%. Prelim GDP Price Index dropped by 1.2%, but this beat the market forecast, and is the the index has now moved upwards for three consecutive months. Revised Industrial Production also looked good, posting a 1.3% increase. The market estimate stood at 1.1%. USD/JPY is down slightly, and was trading at 80.24. USD/JPY daily chart with support and resistance lines on it. Click to enlarge: Prelim Machine Tool Orders: Monday, 6:00. Machine tool orders in March climbed 2.4% on a yearly base after 8.45% decline in February. Domestic demand increased 24.7%, marking the first growth in three months, while foreign demand decreased 6.4%, down for the third straight month. Household Confidence: Tuesday, 5:00. Japan’s consumer confidence soared to 40.3 in March compared to39.9 in February indicating optimism concerning labor conditions in the coming six months. An improvement was felt in all four sub-indexes overall economic well-being, labor conditions and income growth, income growth and the timing of buying durable goods rose from the previous month. A further increase to 40.9 is expected now. Core Machinery Orders: Tuesday, 23:50.Japan’s core machinery orders unexpectedly jumped 4.8% in February from 3.4% gain in January. Economists expected a 0.7% decline. The major rebuilding projects gave boost to corporate spending. Core orders is expected to decline 3.3% this time. Tertiary Industry Activity: Tuesday, 23:50.Japan’s service sector activity remained flat in February, while economists forecasted a 0.7% increase. This reading followed a 0.6% decline in January. The drop occurred in wholesale and retail trade and transport and postal activities. A drop of 0.3% is expected now. Prelim GDP: Wednesday, 23:50. Japan’s gross domestic product for October to December shrank 0.6% according to preliminary data but was upwardly revised to a 0.2% decline due to a rise in economic indicators released by the Government and a surge in corporate spending in the fourth quarter of 2011 contributing to growth. An increase of 0.9% is anticipated. Revised Industrial Production: Thursday, 4:30.Japan’s industrial production in February fell by a revised 1.6% following 1.2% decline in January due to a slowdown in machinery and automobile production. However the ministry expects a 3.4 % increase in factory output in March and a decline of 0.3 percent in April.A further gain of 1.1% is expected. G8 Meetings: Fri.-Sat. President Obama will host the 2012 G8 Summit at Camp David from May 18-19. The Group of Eight (G8) is a forum comprised of the eight of the world’s most industrialized nations, aimed discuss key topics and provide solutions for global issues. The G8 includes Canada,France,Germany,Italy,Japan,Russia, theUnited Kingdom and theUnited States. Russian Prime Minister Dmitry Medvedev will represent Russia at the G8 summit instead of PresidentVladimir Putin who is required to finalize appointments to his cabinet inRussia. * All times are GMT USD/JPY Technical Analysis $/yen started the week with a small rise, temporarily crossing the round 80 line (discussed last week). It then dropped and traded in a narrow range, closing at 79.91, 8 pips above the previous close. Technical lines from top to bottom 85.50 is a key line on the far upside. This was a peak after a strong move in March 2011. It held for some time and remains the ultimate peak. 84.50 capped the pair at the end of 2010 and at the beginning of 2011 and is a bit weaker now. An important line of resistance is found at 84, which capped the pair back in February 2011 and provided some resistance in March 2012. It proved by holding two weeks in a row. The minor line of 83.50, which was a glass ceiling for the pair during March 2012, closely follows. 82.87 was the line where the BOJ intervened in September 2010, and also worked in both directions afterwards. It worked as support when the pair traded higher and remains a cap. 81.80 served as support for the pair at the end of March 2012 and is now strong resistance after capping the pair also in mid April in more than one instance. Close by, 81.43 is now stronger, after serving as resistance for a recovery attempt. 80.60 provided support for the pair around the same time, and served as a bouncing spot for the next moves. 80.30 worked as a good cushion for the pair in April. The fall below was eventually confirmed. The round number of 80, which provided strong support in June, is the next line, and it is of high importance. 79.60 was a double bottom in May 2012 and is now key support. 78.30 capped a second recovery attempt in November, after the intervention and had an important role earlier as well, working as support. After it was broken, the rally intensified. It now switches to support. I remain neutral on USD/JPY. The turmoil in Europe continues weighing on the pair, with the yen attracting safe haven flows. On the other hand, the closure of Japan’s nuclear facilities, the better economic situation in the US and with potential stealth intervention by the BOJ all support the pair. In the longer run, the pair is likely to resume its rise. Another note: USD/JPY so far justifies its title as the most predictable currency pair for Q2. 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 to 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 forecast For the Swiss Franc, see the USD/CHF forecast. 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 EUR/USD Outlook May 14-18 Yohay Elam 10 years USD/JPY remained in range and closed the week almost unchanged, as safe haven flows balanced upside pressure. The first release of GDP is the highlight of this busy week. Here's an outlook for the Japanese events and an updated technical analysis for USD/JPY. Last week Japan's current account surplus narrowed to a seasonally adjusted 785.5bn in February from 856.2bn in January. The current account for 2011 fell 52.6% due to stronger energy imports following Japan's Earthquake/Tsunami and subsequent nuclear disaster. 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