The December Yen continues to be the main beneficiary of Washington budget difficulties, with prices reaching a fresh 5-week high before losing upside momentum early this morning. Japanese equities have not taken kindly to the formal announcement of a sales tax hike next year, even with a likely “offset” from corporate tax cuts and fresh fiscal stimulus, which is providing the Yen with another source of safe-haven support this week. The Bank of Japan may not ramp up their efforts at this week’s meeting, but are unlikely to ease back on their aggressive easing measures anytime soon. The December Yen may climb back toward the 102.80 area from dovish ECB commentary and if there is disappointment from the ADP survey, but it will have trouble sustaining this current up move if safe-haven support continues to be its main source of strength.
Technical Outlook
JPY (DEC): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market’s short-term trend is positive on the close above the 9-day moving average. The daily closing price reversal up is a positive indicator that could support higher prices. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside objective is 103.11. The next area of resistance is around 102.68 and 103.11, while 1st support hits today at 101.58 and below there at 100.90.