The USD/JPY has been following the S&P futures lower in reaction to investor uncertainty surrounding the present valuation of U.S. equities. The Yen was already experiencing a relative strength earlier this week due to strong Japanese data and the DPJ's victory. Therefore, the S&P's pullback below 1000 only gave investors more incentive to test the USD/JPY's patience after drifting beneath our 1st tier uptrend line. The failure of our 1st tier uptrend line indicated a retest of July lows, which has nearly materialized. However, the USD/JPY may opt to consolidate a little today with July highs within reach and a hefty downturn already underway. Additionally, the S&P futures are back in their 1000 trading zone, which obviously has a strong psychological pull. We also notice the GBP/USD and EUR/USD are sliding near their own psychological 1.60 and 1.45 levels, respectively. However, any immediate-term stability may not last long considering investors will receive a large wave of economic news tomorrow.

The U.S. and Britain will release important economic data points tomorrow along with an ECB monetary policy decision. Hence, we expect volatility to pick up tomorrow and throughout the remainder of the trading week. The S&P futures and other Dollar crosses are hovering around their key psychological cushions. Therefore, Thursday's data set could prove to be either a tipping point or stabilizing factor in the FX markets. Considering we have witnessed heightened sell-side activity in both crude and the S&P futures, present momentum appears to be in favor of a larger leg down. Meanwhile, if the USD/JPY can't hold July lows the currency pair could be in for an exacerbated selloff toward the 91 area. As for the topside, the USD/JPY has countless barriers to overcome, beginning with our 1st tier uptrend and 2nd tier downtrend lines.

Present Price: 92.46

Resistances: 92.58, 92.73, 92.97, 93.17, 93.33

Supports: 92.36, 92.22, 92.08, 91.96, 91.72

Psychological: 90, 95