COZforex: The dollar ended the week sharply lower against the yen on Friday amid speculation that the Federal Reserve will scale back its asset purchase program this year.

USD/JPY hit session lows of 100.67 Friday, before paring back losses to settle at 101.29, down 0.71% for the day and extending the week’s losses to 1.43%. Coz forex senior derivatives trader Daniel • Moloney said, USD/JPY is predicted to find support at 100.66, and a drop through could take it to the next support line of 99.58. Meanwhile, the pair is predicted to find its first resistance at 103.00, and a rose through could take it to the next resistance line of 104.26.

On Wednesday Fed Chairman Ben Bernanke said a decision to scale back the US central bank’s USD85 billion-dollar-a-month asset purchase program could be taken in the "next few meetings" depending on economic data. The comments came during testimony on the economy and monetary policy to the US Joint Economic Committee in Washington.

The dollar rise to fresh four-and-a-half year highs against the yen earlier Wednesday after Bernanke said in prepared remarks that a premature tightening of monetary policy carried substantial risks to the economic recovery. Meanwhile, Wednesday’s minutes from the Fed’s May meeting showed a "number" of policymakers were prepared to taper bonds purchases as soon as June.

The dollar hit two-week lows against the yen on Friday after official data showed that U.S. durable goods orders rose 3.3% in April, outstripping expectations for a 1.5% increase.

The Bank of Japan left monetary policy unchanged following its policy meeting on Wednesday, in a widely expected decision. The bank also upgraded its economic outlook, saying growth had started picking up.

Also Wednesday, official data showed that Japan posted a trade deficit of JPY0.76 trillion in April, the tenth consecutive monthly deficit. Exports rise 3.8% from a year earlier, while imports were up 9.4%.

Investors will be looking ahead to BoJ minutes as well as data on Japanese retail sales. The US is to release data on the housing sector, consumer confidence and initial jobless claims.

(COZ forex UK)