The USD/JPY's mini-rally is cooling after interacting with our 1st tier downtrend line. The USD/JPY experienced further strength initially this morning after investors snapped up the Dollar following a wave of better than expected U.S. economic data. However, this favoritism is wearing thin as the S&P futures return earlier gains and the GBP/USD collapses. Regardless of today's broad-based appreciation of the Dollar, the USD/JPY remains entrenched in its medium-term downtrend due to the currency pair's incredible selloff since the beginning of August. The USD/JPY is well out of reach of our 1st tier uptrend line, and it seems the currency pair is headed for a battle with its psychological 90 level. Despite the USD/JPY's negative tendency, the currency pair seems to be running out of room to the downside since it has historical trading ranges nearby dating back to December 2008 and January 2009 lows. Meanwhile, investors continue to act off of the belief that the DPJ will enact economic policies supportive of a stronger Yen. However, it remains to be seen whether the BoJ will alter its monetary policy approach in any dramatic way. Late Wednesday the BoJ will meet for the first time since the DPJ's victory. Though we expect the BoJ to keep its monetary policy intact, such a large shift in governmental power does create a sense of uncertainty in the Yen crosses. In the meantime, the USD/JPY's performance should be reliant on its negative correlation with U.S. equities, at least until Wednesday's BoJ meeting that is.

Present Price: 91.25

Supports: 91.18, 90.96, 90.78, 90.57, 90.26

Resistances: 91.43, 91.65, 91.84, 92.04, 92.24

Psychological: 90