While initially rejecting a breakthrough of the key 100.00 level early this morning, the Yen remains squarelyon the defensive heading into this morning’s trading. A stronger than expected reading for third quarter JapaneseGDP has provided little support for the Yen, as a sharp drop from the second quarter will bolster the case forcontinuing Bank of Japan easing measures. Japanese equities posted solid gains last night, leaving the Yen insearch of a fresh source of flight-to-safety flows in order to find some measure of near-term support. TheDecember Yen could fall down towards the 99.86 level before today’s US data and Yellen testimony, but may beheading for a retest of the mid-September low of 99.43 if December Fed tapering prospects remain intact after themarket digest today’s events.
Technical Outlook
JPY (DEC): Momentum studies are still bearish but are now at oversold levels and willtend to support reversal action if it occurs. The market’s short-term trend is negative as the close remains belowthe 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. Thenext downside target is 100.09. The next area of resistance is around 100.80 and 101.06, while 1st support hitstoday at 100.32 and below there at 100.09.