Positive vibes from the Bank of Japan and from Japanese economic data have lifted the Yen well awayfrom yesterday’s low and back above its 50-day moving average, but the market still has a long way to go in orderto fully recover from recent losses. While the BOJ followed the Fed’s lead with staying the course with theiraccommodative monetary policy, their upgraded outlook for the Japanese economy was given further credenceby last night’s much better than expected Housing Starts number. There were 3 dissenting votes at the BOJmeeting, 2 of which were that a 2% inflation target will take much longer than two years to achieve, which willprovide a significant dose of caution to the market. The December Yen may climb up towards the 102.02 levelwith weak US data later today, but will need much more in the way of flight-to-safety support in order to make alarge-scale recovery from these levels.
Technical Outlook
JPY (DEC): The major trend has turned down with the cross over back below the 60-daymoving average. A crossover down in the daily stochastics is a bearish signal. Declining momentum studies in theneutral zone will tend to reinforce lower price action. A negative signal for trend short-term was given on a closeunder the 9-bar moving average. The market setup is somewhat negative with the close under the 1st swingsupport. The next downside target is now at 100.91. The next area of resistance is around 101.84 and 102.27,while 1st support hits today at 101.16 and below there at 100.91.