The September Yen has been the main beneficiary of this week’s risk aversion mood, and has already recovered a sizable portion of last week’s pullback during the last 18 hours of trading. Severe weakness with the Pacific Rim emerging market currencies and equities has been a major portion of the Yen’s flight-to-safety flows this week, but it has also helped that there have been few fresh Japanese data points for the market to compare against recent sluggish US numbers. Fresh talk of Japanese corporate tax cuts has had little impact with dampening the Yen’s near-term strength, as Japanese equities are seeing little tangible benefit from those ideas this week. The Yen will hold the upper hand on the Dollar and most major currencies while global markets hold onto this current “risk off” mood, but it may have trouble sustaining this current upside momentum when the market starts to digest key Japanese economic data later this week. The September Yen could rise up towards the 102.55 level later today, and is likely to remain well supported as long as risk aversion dominates the global marketplace.
Technical Outlook
JPY (SEP): Momentum studies are declining, but have fallen to oversold levels. The close below the 9-day moving average is a negative short-term indicator for trend. The market has a slightly positive tilt with the close over the swing pivot. The next downside objective is now at 100.95. The next area of resistance is around 101.94 and 102.16, while 1st support hits today at 101.34 and below there at 100.95.