The Yen is short covering off fears that the global deflationary spiral could become an entrenched debacle and that in turn could derail the long awaited exodus from deflation in Japan. While we doubt that there will be a significant repatriation of capital back to Japan unless there is a real debacle, the short term track in the Yen might allow for continued short covering which in turn offers longer term position traders a chance to get short at a much more attractive level.
Technical Outlook: Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The market could take on a defensive posture with the daily closing price reversal down. It is a slightly negative indicator that the close was lower than the pivot swing number. The near-term upside objective is at 85.84. The next area of resistance is around 84.88 and 85.84, while 1st support hits today at 83.35 and below there at 82.77.