The September Yen made a fresh two-week high last night, but has lost upside momentum and has fallen all the way into negative territory this morning. Comments from Bank of Japan Deputy Governor that his nation needed to reach the BOJ’s 2% inflation target “as soon as possible” helped to put the brakes on the Yen’s recovery rally this week, which has been fueled as much by Asian emerging market weakness as by concerns over Syrian military intervention. While the Yen may still have the near-term upper hand on the Dollar while there is uncertainty over the timing of Fed tapering, the longer-term prospects for the Yen remain fairly bleak. It has now been more than 2 weeks since the Yen has been able to sustain any move above the 103.00 level, which may indicate a fairly solid resistance area even if events in Syria start to escalate. The September Yen may slide down to the 102.40 level later in today’s session, and is once again showing signs of being top-heavy around these current levels.
Technical Outlook
JPY (SEP): The cross over and close above the 60-day moving average is an indication the longer-term trend has turned positive. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The market now above the 18-day moving average suggests the intermediate-term trend has turned up. Since the close was above the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. The next downside target is 101.04. The next area of resistance is around 103.83 and 104.29, while 1st support hits today at 102.21 and below there at 101.04.