A large set of Japanese economic data last night has provided little lasting benefit for the Yen, althoughprices were able to bounce off of a new low for the move early this morning. While the clear data highlight wasnews that Japanese Core CPI climbed back above the 1.0% year-on-year level for the first time since the fall of2008, that positive impact was offset by an up tick in Unemployment and a sluggish Industrial Output reading.Reports of heavy cash forex option activity at the 105 Yen per Dollar level may cap the Yen’s downside going intothe weekend, but this longer-term downtrend looks to have much further downside left to go before finding anylong-lasting price floor. The March Yen may work its way into the chart gap above the 95.60 level later today, withany sizable late-week recovery rally viewed as another opportunity to enter the short side of the market.
Technical Outlook: The sell-off took the market to a new contract low. Daily stochasticsdeclining into oversold territory suggest the selling may be drying up soon. The market’s close below the 9-daymoving average is an indication the short-term trend remains negative. More selling pressure is likely givenyesterday’s gap lower price action on the day session chart. The close below the 2nd swing support number putsthe market on the defensive. The next downside objective is now at 95.37. The market is approaching oversoldlevels on an RSI reading under 30. The next area of resistance is around 95.55 and 95.62, while 1st support hitstoday at 95.43 and below there at 95.37.