The Japanese yen lost ground against most of the major currencies as the Bank of Japan announced that it would increase its buying of government debt to 21.6 trillion yen.

US dollar weakness is set to continue in the coming week as an upward correction in risky assets sends capital out of safe haven assets in search of yield.

The British Pound is nearly assured a volatile week ahead as a multitude of conflicting leads ahead of the interest rate announcement from the Bank of England is sure to catch at least some market participants off-guard.

The outlook for the greenback for the next few weeks may hinge upon whether or not the drop signals a reversal or ultimately yields a break higher.

How long can the Japanese yen retain its position as the favored safety of funds currency?

With event risk due to be fairly high this week, a break in the dollar seems possible.

Next week, there are a top-tier economic indicators scheduled for release; but among them only the European Central Bank’s (ECB) rate decision has the potential to fundamentally redefine its currency’s trend.

As usual, the Japanese yen traded in line with shifts in risk appetite over the course of the past week, with widespread losses in the stock markets helping to boost the currency.  These correlations are likely to hold in the near-term, while fundamentals shouldn’t play much of a role.

The euro ended the week mixed across the majors, as the currency slipped against the US dollar, Japanese yen, and Swiss franc but rose versus the British pound and commodity dollars.

Despite dour economic data, the British Pound has room to rise in the near term.  Considering the calendar is not set to offer anything blatantly worse than what has already been priced into the exchange rate, a moderation in rate cut expectations gives sterling some room for a corrective upswing.