The Yen was saved by a temporary shift in focus away from the patently deflationary spiral inside Japan tosuspicion toward the US debt ceiling issue. Another issue that might be providing a flight to quality lift to the Yenis concern that emerging market currency turmoil could restart another crisis. The market could care less aboutthe Japanese budget troubles, ongoing turmoil with China and expectations that the BOJ will be the last centralbank on earth to return to a tightening posture. In the short term, flight to quality dominates and with the freshtechnical progress on the charts, longer term technical short covering buying is likely to propel the Yen up to thenext resistance level of 98.43.
Technical Outlook: The cross over and close above the 40-day moving average indicates thelonger-term trend has turned up. The crossover up in the daily stochastics is a bullish signal. Momentum studiesare trending higher from mid-range, which should support a move higher if resistance levels are penetrated. Themarket’s short-term trend is positive on the close above the 9-day moving average. The outside day up is apositive signal. Since the close was above the 2nd swing resistance number, the market’s posture is bullish andcould see more upside follow-through early in the session. The near-term upside objective is at 98.35. The nextarea of resistance is around 97.84 and 98.35, while 1st support hits today at 96.12 and below there at 94.90.