The December Yen is holding up fairly well in spite of today’s “risk on” market environment, and continues to build upon last week’s reversal from 7-week lows. Today’s Japanese holiday may have helped, but last night’s Summers news has put more emphasis on the Yen being the near-term safe-haven destination of choice. Japanese economic data will need to show consistent improvement in order for the Yen to maintain that status, particularly on the inflation front as it remains well below the BOJ’s 2% target level. While the Yen will clearly benefit from any soft US data readings in front of the FOMC meeting, a large scale upside move may be off the table as long as Syria remains quiet and $10 billion Fed tapering is priced into the market. The December Yen may pull back towards the 101.05 level later this morning, but looks to hold the upper hand on the Dollar until the Fed has its say later on this week.
Technical Outlook
JPY (SEP): Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. The market’s short-term trend is positive on the close above the 9-day moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside target is 101.35. The next area of resistance is around 101.11 and 101.35, while 1st support hits today at 100.33 and below there at 99.78.