The yen has forged a significant recovery over the last two trading sessions but some players areconcerned that another increase in sales taxes could trip up a fragile economy. Unfortunately the Japanesegovernment needs to shore up its debt standing from its multi-decade stimulus efforts and there is no way outwithout significant growth. Given the uncertainty in China and weakness in global equities we can’t argue againsta near term rise in the Yen to 92.50 but it will take a pattern of recovery in global equities and better global macroeconomicsentiment to restart the August and September downtrend pattern.
Technical Outlook: The market was pushed to a new contract low. The daily stochastics gave abullish indicator with a crossover up. Daily stochastics are showing positive momentum from oversold levels,which should reinforce a move higher if near term resistance is taken out. The market’s close above the 9-daymoving average suggests the short-term trend remains positive. The outside day up and close above the previousday’s high is a positive signal. A positive setup occurred with the close over the 1st swing resistance. The nextupside target is 92.59. With a reading under 30, the 9-day RSI is approaching oversold levels. Short-termindicators suggest buying pullbacks today. The next area of resistance is around 92.30 and 92.59, while 1stsupport hits today at 91.30 and below there at 90.59.