Short-covering has helped the Yen climb back above the 100.00 level as sluggish Japanese equities, newsthat nation’s pension reforms may take years to implement and some solid Japanese export and import readingsare providing significant sources of support. After this month’s selloff, however, there has also been a movetowards the sidelines in front of tonight’s Bank of Japan meeting results, as the market may be wary that the BOJmay use signs of Japanese economic progress as a reason to let up on their aggressive easing measures. TheYen may gain further ground during today’s trading, but the market may be setting up for a downside breakout ifthe BOJ maintains course with their monetary policy. The December Yen may rise up towards the 100.24 levelbut could be put back on the defensive fairly quickly with positive US data and hawkish FOMC meeting results.
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. The daily closing price reversal down puts the market on the defensive. It is a slightlynegative indicator that the close was lower than the pivot swing number. The next downside objective is now at99.29. The next area of resistance is around 100.23 and 100.69, while 1st support hits today at 99.53 and belowthere at 99.29.