A normal retracement of the last month slide in the Yen could allow for a recovery 89.79 but we doubt thatthe Yen will be able to engineer that type of upside extension under current fundamental conditions. In fact, atemporary technical balancing in the Dollar is probably the primary impetus behind the recovery in the Yen andwe expect the Dollar to regain its footing through upcoming EU scheduled data flows. Aggressive traders mightconsider getting short the December Yen on a rally back to 88.19.
Technical Outlook: The market broke to a new contract low. Momentum studies are still bearishbut are now at oversold levels and will tend to support reversal action if it occurs. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The daily closing price reversal up onthe daily chart is somewhat positive. With the close higher than the pivot swing number, the market is in a slightlybullish posture. The next downside objective is now at 86.15. Selling may soon dry up since the RSI is under 20indicating the market is extremely oversold. The next area of resistance is around 87.83 and 88.20, while 1stsupport hits today at 86.81 and below there at 86.15.