With the Yen reaching down to a potentially critical technical zone of 95.00 on the charts and the currencyshowing some respect for that level, the odds of sideways consolidation action are on the rise. The Yen is givensome support by Japanese government appointments designed to specifically address the unending deflationthreat in Japan. The Yen might also be garnering some support from favorable Chinese economic data releasedovernight. At least in the short term, we don’t see the Yen knifing below the 95.00 level unless the US data pointsare stronger than expected and or the BOJ announces fresh stimulus efforts.
Technical Outlook: The market broke to a new contract low. Daily stochastics are trending lowerbut have declined into oversold territory. The market’s close below the 9-day moving average is an indication theshort-term trend remains negative. The defensive setup, with the close under the 2nd swing support, could causesome early weakness. The next downside objective is now at 94.36. More downside action may be limited by theRSI under 20 putting the market in extremely oversold territory. The next area of resistance is around 95.67 and96.37, while 1st support hits today at 94.67 and below there at 94.36.