JPY edged higher in the European morning, largely on the back of EUR/JPY heaviness, while USD/JPY was confined to narrow ranges All eyes are on the ECB announcement and the accompanying press conference. EUR/JPY was relatively stable around the mid 149"s after experiencing good selling overnight. Further selling from momentum funds and leverage accounts went through after failing to recapture 150.00.
The pair traded defensively, with up ticks being sold into by smaller European names after decent Swiss account selling overnight. USD/JPY took its lead from EUR/JPY. USD/JPY struggled on the topside, with offers at 117.85/90 capping. Exporters, speculative accounts and options supply left the pair stranded in the 117.50-60 region. Importer and Japanese agency bids ahead of 117.50 underpinned in quiet trade.
The near-term outlook for USD/JPY is mixed after recently failing ahead of the 118.40 trend line. The background positive remains low Japanese rates and improved dollar sentiment. However, fears over long liquidation in EUR/JPY and the knock on impact from the weaker commodity market have increased JPY demand.
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