Into European trading and the Euro had rallied but sellers into 1.2880 capped the topside. Volatility in EUR/JPY is expected to keep spot choppy into North American trading. 1.2920 & 1.2900 are now seen as the key levels on the downside with offers tipped on most books from 1.2880 back to 1.3000.
Stops are tipped above 1.3005 but in the short-term volatility is once more likely to be confined by the 1.29/30 range. Looking ahead, a busy North American session is once more expected. This kicks off with the 13:00 GMT Pianalto comments, however, it is the 13:30 GMT December CPI data that is most eagerly anticipated. Economists expect a +0.4% M/M headline against the previous flat reading. Core inflation is forecast up 0.2%.
Also set for release at 13:30 GMT are the December Housing Start & Real Earning numbers. Following this central bankers will do battle into the European close with the 15:00 GMT Bernanke testimony set to vie with the 16:00 GMT Bini Smaghi rhetoric. Most expect the FOMC Chairman to win by way of a knock-out with ECB inaction forcing spot back towards the base of the 1.29/30 range.
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