The December Yen continues to build onto last Friday’s recovery from weekly lows, and is posting moderate gains early in this week’s trading. The Fed’s tapering inaction last week has driven safe-haven flows into the Yen, which provided a source of strength this morning when disappointing Euro zone “flash” manufacturing PMI numbers dampened global risk sentiment. The Yen may need to see further global risk anxiety in order to sustain this rally, as Japanese inflation levels remain well below the BOJ’s 2% target level and their aggressive measures look to be sustained well into the future. The December Yen may climb up towards the 101.30 level later today, but will remain well below its post-FOMC highs unless global risk aversion becomes a front-and-center issue once again.
Technical Outlook
JPY (SEP): Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The close below the 9-day moving average is a negative shortterm indicator for trend. It is a slightly negative indicator that the close was under the swing pivot. The near-term upside target is at 101.16. The next area of resistance is around 100.93 and 101.16, while 1st support hits today at 100.43 and below there at 100.15.