At the end of last week we projected a rally in the Yen in the wake of the US data, with upside targeting atthe time seen up at 95.60 basis the March Yen contract. However, we only expected a minor disappointment inthe US data Friday instead of a massive miss on the downside and that has clearly expanded the short coveringbias in the Yen. With a holiday in Japan overnight that might have added to the short covering bias, especiallysince a number of moving averages and a longer term down trend channel resistance line were regained. Whilewe don’t expect a full retracement of the October through January washout in the Yen, seeing a return to the 1stretracement point of 98.03 is possible especially if upcoming US data shows any weakness.
Technical Outlook: Momentum studies are trending higher from mid-range, which shouldsupport a move higher if resistance levels are penetrated. The intermediate trend could be turning up with theclose back above the 18-day moving average. The outside day up and close above the previous day’s high is apositive signal. The market’s close above the 2nd swing resistance number is a bullish indication. The next upsidetarget is 97.31. The next area of resistance is around 96.82 and 97.31, while 1st support hits today at 95.38 andbelow there at 94.42.