The continued erosion of safe-haven support has kept the Yen on the defensive late this week, even asJapanese equities have a tough time sustaining upside momentum. Comments by BOJ Deputy Governor Iwatathat it is too early to debate exit strategies for Japanese QE measures do not bode well for the Yen over the longterm,particularly with several BOJ officials concerned that two years may be too soon to reach their 2% inflationtarget. The Yen will clearly be looking for sluggish US data and a dovish ECB this morning to regain upsidemomentum, but needs to find a domestic source of support as well in order to lift decisively clear of these currentprice levels. The December Yen could bounce back towards the 101.62 level later this morning, but may besetting up for a fresh downside leg if it is unable to find fresh support out of the Euro zone and the US news laterthis week.
Technical Outlook
JPY (DEC): Daily stochastics declining into oversold territory suggest the selling may bedrying up soon. The market’s close below the 9-day moving average is an indication the short-term trend remainsnegative. The market’s close below the pivot swing number is a mildly negative setup. The next downsideobjective is now at 101.05. The next area of resistance is around 101.53 and 101.76, while 1st support hits todayat 101.17 and below there at 101.05.