USD/JPY holds steady into the NY cut, with spot trading around 118.60 after recording a 118.80 session high. The push higher was thwarted by good size offers from 118.80. The background dollar bid tone continues to limit the USD/JPY downside, while the JPY crosses have fallen away from their session highs after posting a modest recovery in the European morning session.
Bias for USD/JPY and the JPY crosses remains on the downside, with macro account interest and speculative positioning still favouring JPY. As we head towards the BOJ meeting the risk of further JPY gains will increase, which will see key levels below 118.00 come under pressure.
USD/JPY's directional bias will be tested in the 117.65-117.95 zone, where a number of bids lie. Commercial names have been good buyers over the last few weeks and there is decent technical support below 118.00.
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