The USD/JPY is rallying Monday morning, bucking its positive correlation with U. S. equities. The new negative correlation between the two continues to be confirmed with investors judging the currencies based on the comparative economic strength of Japan and the U. S.

With the Carry Trade unwound, running to the Yen as a `safe haven' is over. Even though the U. S. economy is crumbling, the Japanese economy is worse off. Today Japan released a discouragingly low Current Account Surplus, revealing Japanese exports are deteriorating faster than expected. Lower exports spells more trouble for Japan's manufacturing base.

However, keep in mind a depreciating Yen is great news for beleaguered Japanese exports, and could help improve the demand picture for the time being. Therefore, it will be interesting to see if the USD/JPY peaks in the near-term should the U. S. economy deteriorate and the Japanese economy show signs of improvement.

One thing is for certain, our 3rd tier downtrend line and the psychological 100 area will pose a formidable challenge to the upside. Fundamentally, we find resistances of
99.05, 99.96, 100.69 and 101.47. To the downside, we see supports of 98.25, 97.66, 97.22, and 96.59. The USD/JPY is currently exchanging at 98.95.

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