As we suggested yesterday, the Yen was poised to benefit from revived safe haven anxiety, which in turn is flowing from Russia, the Euro zone and even from China. Adding into the flow toward the Yen is news overnight that Japanese budget forecasts for 2015-2016 pegged tax revenues at a fresh record high. For the near term, the Yen might be expected to claw out more gains in the wake of more weakness in energy prices and further declines in global equities. However, significant down trend channel resistance was violated overnight at 83.97 but the market was unable to hold above that potentially critical pivot point. While we can’t rule out a temporary test of the 85.00 level ahead, we think the time to re-enter shorts in the yen is at hand.
Technical Outlook: Daily stochastics are trending lower but have declined into oversold territory. The market’s short-term trend is positive on the close above the 9-day moving average. Market positioning is positive with the close over the 1st swing resistance. The next downside target is 82.63. The next area of resistance is around 84.10 and 84.40, while 1st support hits today at 83.22 and below there at 82.63.