Forex - USD/JPY weekly outlook: April 25-29

Forex Pros – Last week saw the U.S. dollar fall to close to a one-month low against the yen, as expectations that the U.S. Federal Reserve will trail behind other central banks in raising interest rates continued to weigh on the greenback.

USD/JPY hit 81.60 on Thursday, the pair’s lowest since March 29; the pair subsequently consolidated at 81.86 by close of trade on Friday, shedding 1.58% over the week.

The pair is likely to find support at 80.70, the low of March 23 and resistance at 83.25, the high of April 18.

Standard & Poor’s warned the U.S. government last week that it risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. S&P maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.

Meanwhile, on Friday, Bank of Japan Governor Masaaki Shirakawa acknowledged the possibility that Japan’s earthquake stricken economy could contract in the first half of the year and vowed to take action should conditions deteriorate further.

Mr. Shirakawa said the major problem facing the economy following the March 11 earthquake was stalled production.

"We are always carefully monitoring the situation and if we think it is necessary to take additional action, we as central bankers are ready to take such action," Mr. Shirakawa said.

Looking ahead, in a week that will be shortened by holidays in many places, the highlight will be on Wednesday, when Fed Chairman Ben Bernanke holds a press conference after the bank’s rate setting meeting, the first ever regularly scheduled briefing by a Fed chief in the U.S. central bank's 97-year history.

The Bank of Japan, meanwhile, is to meet on Thursday with monetary policy and the damage from Japan's triple disasters still at issue.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Markets in the euro zone, the U.K., Switzerland, Australia and New Zealand will all be closed for the Easter Monday holiday.

Meanwhile, the U.S. is to publish government data on new home sales, a leading indicator of economic health.

The U.S. is to publish reports on house price inflation and consumer confidence, as well as official data on manufacturing activity in Richmond.

Japan is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

The U.S. is to publish official data on durable goods orders, a leading indicator of production and crude oil inventories. Also Wednesday, the Federal Reserve is to announce its federal funds rate. The announcement is to be followed by the first ever regularly scheduled briefing by a Fed chief in the U.S. central bank's 97-year history.

Japan is to release a flurry of data, with government reports on manufacturing, household spending, consumer price inflation, unemployment and industrial production.

In addition, the BoJ is to hold its monthly rate setting meeting which is to be followed by a press conference to discuss the interest rate decision and the economic outlook.

Also Thursday, the U.S. is to publish advance data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health. The country is also to publish government data on initial jobless claims and a report on pending home sales.

Markets in Japan are to remain closed for a public holiday.

The U.S. is to round up the week by releasing a flurry of data, with a government report on personal spending, personal income and personal consumption expenditures. The U.S. is also to publish a report on manufacturing activity in the in the Chicago area, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.

Later in the day, Fed Chairman Ben Bernanke is to speak at a public engagement. His comments will be closely watched for any clues to the possible future direction of monetary policy.

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