The December Yen continues to benefit from safe-haven flows this morning, and has climbed to a new weekly high early in today’s trading session. Sluggish Japanese equities are contributing to the risk aversion mood created by Washington budget uncertainty, which has more than overcome bearish factors from the Japanese domestic front. Tonight’s Japanese CPI data will be a critical factor in whether the Yen can hold onto these recent gains, as a third straight positive year-on-year reading will take some pressure off of the Bank of Japan to maintain their current aggressive easing measures. The December Yen may be able to extend today’s rally up to the 101.82 level if US data disappoints the market, but any large-scale up move will likely be off the table until Japanese inflation readings are digested by the market later tonight.
Technical Outlook
JPY (DEC): Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside objective is 101.99. The next area of resistance is around 101.68 and 101.99, while 1st support hits today at 100.96 and below there at 100.56.