A revival of safe-haven support from Chinese banking difficulties has helped the Yen put together a sizablerecovery rally this morning, which was given further strength by a sharp sell off in Japanese equities. However,Tuesday’s vicious whipsaw price action in the wake of the US jobs data may give the market pause for thought asto how much further upside the Yen may have if Fed tapering is unlikely to occur until well into 2014, and if theEuro continues to climb higher. Recent Japanese economic data has provided few highlights, and improvementon lifting inflation levels may be limited going forward especially after crude oil prices have fallen more than $8 abarrel since the end of August. The December Yen may extend this up move past the 103.04 area if negativeChinese banking vibes continue to rattle global markets, but it will need to see much more deterioration withglobal risk appetites to extend today’s recovery and approach the early October highs.
Technical Outlook
JPY (DEC): Declining momentum studies in the neutral zone will tend to reinforce lowerprice action. The market’s short-term trend is positive on the close above the 9-day moving average. The dailyclosing price reversal up is a positive indicator that could support higher prices. The market tilt is slightly negativewith the close under the pivot. The next downside objective is 101.24. The next area of resistance is around102.27 and 102.60, while 1st support hits today at 101.59 and below there at 101.24.