This week will help traders separate and rank the potency of the various factors driving Japanese Yen price action going forward, aiding in building an informed directional bias for the months ahead.

The Japanese yen looks set for sharp declines as economic fundamentals look set to re-capture the attention of the currency markets.

The British Pound is all but guaranteed a week of heavy volatility as the busy economic calendar headlined by a pivotal interest rate announcement from the Bank of England is compounded by hints of a downward reversal in risk appetite.

Direction from the Japanese yen is often the product of risk appetite, and the fundamental outlook for next week doesn’t suggest this essential correlation will break any time soon.

Minutes from the last meeting of the Bank of Japan are unlikely to produce much more insight beyond the initial policy announcement.

Looking at the economic docket, it seems relatively light on market movers, but there is certainly fuel in the few indicators that populate the calendar.

The upcoming Bank of England rate decision could be the major event risk for the week if we see the central bank issue a statement addressing its future intensions regarding quantitative easing.

The UK economic calendar will give us some insight into the pace of the recovery and the depth of the hole that it finds itself in.

Should we be watching for breakouts this week?

The Japanese yen the past week mostly lower, as FX carry trades made headway.  However, the inability of US equities to make a clear break above their recent highs and tight consolidations suggest that the JPY crosses could see some sort of break this coming week.