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Forex - USD/JPY weekly outlook: February 25 - March 1

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Investing.com - The yen was lower against the dollar on Friday as expectations for more aggressive monetary easing measures by the Bank of Japan continued to pin down the yen.

USD/JPY hit a session low of 92.93 on Friday, before settling at 93.36, 0.26% higher for the day, but down 0.26% for the week.

The pair is likely to find support at 92.66, the low of February 14 and resistance at 94.45, the high of February 11 and a two-and-a-half-year high.

Investors were awaiting news on nominees to replace outgoing Bank of Japan Governor Masaaki Shirakawa, whose policies Prime Minister Shinzo Abe has criticized for not going far enough to combat deflation.

The dollar found support after Wednesday's minutes of the Federal Reserve's most recent policy meeting indicated that the bank may wind down its bond-buying program sooner than expected.

The minutes of the Fed's January meeting showed that policymakers discussed the slowing or stopping of bond purchases even before the job market improves, amid concerns that the policy could cause instability in financial markets.

The yen was also lower against the euro on Friday. EUR/JPY touched a session low of 122.55 before clawing back to 123.11 at the close, 0.24% higher for the day, but 1.5% lower for the week.

The euro remained under pressure after the European Central Bank said euro zone lenders are to pay back EUR61 billion of the funds they borrowed as part of the ECB second long-term refinancing operation one year ago, about half what the market had expected.

The announcement cast doubts over the health of the European banking sector and undermined investor confidence in the euro zone.

Investors also remained wary ahead of the outcome of the upcoming general elections in Italy, amid wariness that a hung parliament could hamper efforts to implement further economic reforms.

However the single currency found support after the Ifo index of German business climate jumped to 107.4 from 104.3 in January, outstripping expectations for a reading of 105.0.

In the week ahead, testimony on monetary policy by Fed Chairman Ben Bernanke in Congress will be closely watched, while developments in Japan will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.

Tuesday, February 26

The U.S. is to release a report on consumer confidence, as well as official data on new home sales, a leading indicator of economic health. The U.S. is also to release industry data on house price inflation. In addition, Fed Chairman Ben Bernanke is to testify on monetary policy before the Senate Banking Committee, in Washington DC.

Wednesday, February 27

Japan is to release official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

The U.S. is to produce official data on durable goods orders, pending home sales and crude oil inventories. Meanwhile, Fed Chairman Ben Bernanke is to testify on monetary policy before the Senate Banking Committee for a second day, in Washington DC.

Thursday, February 28

Japan is to release preliminary data on industrial production, a leading economic indicator.

Later Thursday, the U.S. is to release revised data on fourth quarter economic growth, in addition to the weekly government report on initial jobless claims and official data on manufacturing activity in Chicago.

Friday, March 1

Japan is to release official data on household spending, capital spending and inflation.

The U.S. is to round up the week with a report from the Institute of Supply Management on manufacturing activity, official data on personal spending and revised data on consumer sentiment from the University of Michigan.

Federal Reserve Chairman Ben Bernanke is to speak in San Francisco; his comments will be closely watched for indications on the future possible direction of monetary policy.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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