The September Yen has seen the most volatile price action of any major currency early this week, and has fallen well below the overnight highs to post sizable losses this morning. Last night’s Japanese trade numbers showed double-digit year-on-year growth for both exports and imports, but both of those substantial increases were due in large part to the Yen’s decline in value during that timeframe. Economic reform moves in China over the weekend has eroded the Yen’s safe-haven support, which will make it difficult for the market to retest the 103.00 level early this week. Quiet market conditions may keep a sharp downside move off the table for now, but it will be difficult for the Yen to regain upside momentum as long as global market sentiment shows improvement. The September Yen may find support around the 102.04 level this morning, and is likely to remain on the defensive as long as US and Euro zone longer-term debt yields continue to climb.
Technical Outlook
JPY (SEP): Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. A negative signal for trend short-term was given on a close under the 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downside objective is 101.82. The next area of resistance is around 102.88 and 103.35, while 1st support hits today at 102.12 and below there at 101.82.