With few surprises from last night’s Bank of Japan meeting results, the Yen remains on the defensive afterreaching another new multi-year low this morning. While the BOJ expressed some optimism that next year’s Japanese sales tax hike will not create a need for fresh stimulus, few in the market share that viewpoint as their2% inflation target remains a difficult task given their nation’s long period of deflation. Given the steep losses andwith a significant amount of cash forex options expiring today, the Yen remains vulnerable to a sizable shortcoveringrally to finish off this week. The March Yen may rise up towards the 96.35 area later this morning, butlarge-scale rallies should continue to be viewed as opportunities to enter the short side of the market.
Technical Outlook: The market made a new contract low on the break. Daily stochastics aretrending lower but have declined into oversold territory. The close below the 9-day moving average is a negativeshort-term indicator for trend. The market tilt is slightly negative with the close under the pivot. The next downsideobjective is now at 95.51. Some caution in pressing the downside is warranted with the RSI under 30. The nextarea of resistance is around 96.28 and 96.62, while 1st support hits today at 95.72 and below there at 95.51.