In spite of calmer overseas risk conditions this week, the Yen has been able to maintain upside momentumgoing into this morning’s trading. A rebound in Japanese Machinery Orders helped to lift prices, but it may be lastnight’s lukewarm performance of Japanese equities that has fueled the Yen’s rebound. Given the prospects foraggressive BOJ easing measures and limited sources of safe-haven support going into the year-end, the Yen’supside remains limited at best. The December Yen may extend today’s gains up to the 97.82 area later in thesession, but traders should wait for a potential move back towards last week’s highs above the 98.00 level beforeapproaching the short side of the market again.
Technical Outlook: The sell-off took the market to a new contract low. Daily stochasticsdeclining into oversold territory suggest the selling may be drying up soon. The market’s short-term trend isnegative as the close remains below the 9-day moving average. The outside day up is a positive signal. A positivesetup occurred with the close over the 1st swing resistance. The next downside target is now at 96.44. The nextarea of resistance is around 97.69 and 97.97, while 1st support hits today at 96.93 and below there at 96.44.