Reports that some traders might have unwound long Nikkei/short Yen plays probably fueled the range upextension in the Yen yesterday. Given the dual fears of slowing in China and fears of slowing from the prospect ofRussian sanctions, the news this week should have provided the Yen with a more significant upside reaction thisweek. While we can’t rule out fresh buying in the Yen today off slowing fears in China and uncertainty off theRussian situation, we don’t think the Yen will be able to effectively throw off the down trend that has been in placesince the early February high.
Technical Outlook: The cross over and close above the 40-day moving average indicates thelonger-term trend has turned up. The crossover up in the daily stochastics is a bullish signal. Positive momentumstudies in the neutral zone will tend to reinforce higher price action. The market now above the 18-day movingaverage suggests the intermediate-term trend has turned up. Since the close was above the 2nd swing resistancenumber, the market’s posture is bullish and could see more upside follow-through early in the session. The nextupside objective is 99.36. The next area of resistance is around 98.97 and 99.36, while 1st support hits today at97.71 and below there at 96.83.