Sizable year-on-year gains on both the export and import sides of the equation could not prevent theJapanese Trade deficit from reaching a record level, which has weighed on the Yen coming into this morning’strading. Reports that the Bank of Japan sees further room to increase their bond purchases has also weakenedthe Yen this morning, although it should not be much a surprise given that their 2% inflation target remains wellbeyond the market’s horizon. Even with the BOJ likely to remain on-hold at this week’s meeting, the Yen looks tohave much further downside left to go before the longer-term downtrend runs out of steam. The March Yen couldclimb up towards the 97.75 level with a surprisingly dovish Fed this afternoon, but any sizable bounce later todayshould still be viewed as a fresh opportunity to enter the short side of the market.
Technical Outlook: The daily stochastics gave a bullish indicator with a crossover up. Dailymomentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1stswing resistance. A positive signal for trend short-term was given on a close over the 9-bar moving average. Apositive setup occurred with the close over the 1st swing resistance. The near-term upside target is at 98.01.Short-term indicators suggest buying dips today. The next area of resistance is around 97.80 and 98.01, while 1stsupport hits today at 97.20 and below there at 96.81.