The December Yen was able to reach a new high for the move last night, but has pulled well below those early price levels and is finding mild pressure this morning. A surprisingly sharp drop in the Japanese current account may be due in large part to higher energy prices, but will give policymakers another item to support stimulus measures from both the fiscal and monetary sides of the equation. Safe-haven support continues to be the Yen’s main pillar of strength, although Japanese equities have broken their losing streak which will put even more emphasis on developments in Washington as a source of near-term direction for the Yen this morning. The December Yen may slide down towards the 102.82 area later in the session, and will likely need to see fresh signs of discord from Washington in order to retest last night’s highs.
Technical Outlook
JPY (DEC): Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The close above the 9-day moving average is a positive short-term indicator for trend. With the close over the 1st swing resistance number, the market is in a moderately positive position. The near-term upside target is at 103.89. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 103.71 and 103.89, while 1st support hits today at 103.07 and below there at 102.60.