The September Yen has come through a bumpy overnight session with modest strength, but is looking increasingly vulnerable to a large downside move later this morning. Comments by Japanese Finance Minister Aso downplaying the impact of corporate tax cuts provided the Yen with fresh support, with the resulting sell off in Japanese equities providing additional flight-to-safety flows as well. In spite of a sluggish Dollar and lukewarm risk sentiment, the Yen is well off of its overnight highs and showing few signs of making any large-scale rebound. If today’s set US data can help to reinforce Fed tapering prospects, the Yen is likely to slide well below the 102.00 level and head down towards yesterday’s weekly low. The September Yen may find near-term support around the 101.79 level, but will find much more pressure if today’s US data can post across-the-board positive results later today.
Technical Outlook
JPY (SEP): Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The upside closing price reversal on the daily chart is somewhat bullish. The market’s close below the pivot swing number is a mildly negative setup. The next downside objective is 101.35. The next area of resistance is around 102.25 and 102.51, while 1st support hits today at 101.67 and below there at 101.35.