Forex - USD/JPY weekly outlook: October 21 - 25

The dollar ended the week lower against the yen on Friday amid concerns that the Federal Reserve will extend its stimulus program to support the economy following the U.S. government shutdown.

USD/JPY ended Friday’s session at 97.78, down 0.14% for the day, after hitting lows of 97.56. The pair ended the week with losses of 0.87%.

The pair is likely to find support at 96.81, the low of October 9 and resistance at 98.14, Friday’s high.

The dollar initially hit three-week highs against the yen on Thursday after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling, with just hours to spare ahead of a deadline to avert an unprecedented sovereign debt default.

The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.

But the dollar weakened across the board amid fears that the impact of the government shutdown on the already fragile economic recovery would prompt the Fed to delay plans for tapering its asset purchase program until at least early next year.

The possibility of another debt crisis also loomed, as the temporary solution does not resolve the underlying budgetary issues dividing Republicans and Democrats.

In the week ahead, U.S. data releases will be in focus after the shutdown delayed the release of some key economic reports. The Department of Labor is to publish the September nonfarm payrolls report on Tuesday and data on durable goods orders is to be published on Friday.

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

Monday, October 21

Japan is to release data on the trade balance, the difference in value between exports and imports.

The U.S. is to release private sector data on existing home sales, a leading indicator of demand in the housing sector.

Tuesday, October 22

The U.S. is to publish the September nonfarm payrolls report, which had been originally scheduled for release on October 4.

Wednesday, October 23

The U.S. is to publish data on import prices, a leading contributor to inflation.

Thursday, October 24

The U.S. is to release the weekly report on initial jobless claims, as well as data on new home sales.

Friday, October 25

Japan is to publish data on consumer price inflation, which accounts for the majority of overall inflation.

The U.S. is to round up the week with data on durable goods orders, a leading indicator of production, as well as revised data on consumer sentiment from the University of Michigan.