IRA EPSTEIN & COMPANY
223 West Jackson, 7th Floor, Chicago, Illinois
312-207-1800(March 14, 2000) CURRENCIES: JAPANESE YEN--As of the writing of this report, the June Japanese Yen is trading at 9641, up 67.
Overnight news from Japan suggested that the Japanese economy had slipped back into a recession in the 4th quarter. However this news hasn't discouraged good money flow into the yen in early trade at the IMM here in Chicago on Monday morning, as I'm writing this letter.
Even with Japan's gross domestic product falling on the low end of expectations and the Nikkei down 560 points at 19,189, the yen has risen and is possibly breaking out to the upside. Traders are scratching their heads trying to make sense of it, with only the prospect of Japanese monetary intervention left to slow the yen's appreciation.
Japan's economy has technically slipped into recession, as real gross domestic product contracted for the second consecutive quarter. The GDP fell an adjusted 1.4% in October-December on quarter, the third largest drop following a 3.4% drop in the January-March 1979 time frame. This occurred during the second world oil crisis. A 2% decline in occurred April-June 1997, when the consumption tax rate was hiked to 5% from 3%.
On the technical side, the June Japanese Yen remains in the dominant trading range of 9665 resistance and 9405 support. The momentum studies are in overbought territory, which might suggest more consolidation in this range. Breaking out above the top of the daily range would target next resistance of 9775. Failing to hold support would target 9302.
I believe the market has possibly formed a near-term bottom. Any dip in the market should be seen as an opportunity to establish long positions.
Steve Bickett
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