The September Yen was unable to sustain an overnight move to a new 7-week high, but remains very well supported going into this morning’s trading. A 4% decline in the Nikkei is providing a large source of safe-haven support for the Yen early today, with additional short-covering in front of tonight’s Bank of Japan meeting results. While there has been progress on the Unemployment and Inflation front, Japanese CPI remains well below the BOJ’s 2% target. Even if there are no fresh measures taken at this week’s meeting, there is little chance the BOJ will step away from their current aggressive easing stance. While the Yen has the upper hand on the Dollar as a flight-to-safety destination, it may be difficult to sustain this current upside momentum unless there are fresh concerns from China and the Euro zone to rattle Asian and global markets. The September Yen could see a retest of the 103.36 overnight high later today, but is likely to have trouble extending this current post-Payroll number rally once the market has a chance to digest the Bank of Japan meeting results during tonight’s overnight session.
Technical Outlook
JPY (SEP): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term was given on a close over the 9-bar moving average. The gap lower on the day session chart is bearish and puts the market on the defensive. It is a mildly bullish indicator that the market closed over the pivot swing number.