The BoJ's first monetary policy decision under the DPJ came and went with little reaction. The BoJ kept quiet concerning its QE plans, and appears to have learnt its lesson from the psychological impact of recent comments. In fact, the BoJ kept its monetary policy unchanged and didn't mention anything about ending the corporate bond liquidity program by year end as many analysts had anticipated. The USD/JPY popped earlier in the session, yet has cooled to trade relatively unchanged. While there is plenty of speculation surrounding the DPJ and BoJ's opinions concerning the Yen's appreciation, it seems the ruling party and central bank feel comfortable with market forces determining the value of the major Yen crosses. Hence, there is little evidence supporting a concrete shift in the trend of the USD/JPY. Therefore, we maintain our negative outlook on the USD/JPY so long as the Dollar continues its broad-based appreciation and the BoJ refrains from intervening.

Meanwhile, the USD/JPY's immediate-term movements will largely rely upon the upcoming performance of U.S. econ data and Q3 earnings results. Stronger than expected numbers would likely yield further equity strength and Dollar weakness, thereby placing downward pressure on the USD/JPY. However, the BoJ could provide a counteractive, psychological force with its monthly report on Thursday and Governor Shirakawa's public address on Friday. Technically speaking, the USD/JPY is presently trading in the middle of important barriers and cushions.

As for the topside, the USD/JPY has to deal with the highly psychological 90 zone, previous October highs, and multiple downtrend lines. The USD/JPY's rapid descent has placed quite a few challenging obstacles overhead, and it will take hefty buy-side support to overcome these barriers. As for the downside, the currency par has technical cushions in the form of 10/2 and 10/7 lows along with the important 1st tier uptrend line. A retracement beneath our 1st tier uptrend line would likely result in accelerated near-term losses and a retest of January lows.

Present Price: 89.34

Resistances: 89.45, 89.68, 89.84, 89.99, 90.21, 90.43

Supports: 89.17, 88.97, 88.78, 88.63, 88.41, 88.19

Psychological: 90, 2009 and 2008 lows