The December Yen has regained upside momentum after yesterday’s downdraft, but continues to see erratic price action late this week. Last night’s Japanese CPI number came in at the highest year- n-year reading since late in 2008 but was clearly boosted by higher energy prices, an important item to consider when you have a chronically weak currency with crude oil prices staying above the $100 level during the past few months. Political back-tracking on a potential Japanese corporate tax cut has provided additional fuel to the Yen’s safehaven support this morning, but it will be difficult to fully recover from yesterday’s reversal unless a risk-aversion mood takes a much firmer grip upon global markets heading into the weekend. The December Yen may climb up towards the 101.66 area later on this morning, but will need to remain a “first-choice” safe-haven destination in order to hold onto today’s early gains.
Technical Outlook
JPY (DEC): The close under the 60-day moving average indicates the longer-term trend could be turning down. Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The close below the 9-day moving average is a negative short-term indicator for trend. The outside day down and close below the previous day’s low is a negative signal. The close below the 1st swing support could weigh on the market. The next upside objective is 102.14. The next area of resistance is around 101.59 and 102.14, while 1st support hits today at 100.70 and below there at 100.35.