The USD/JPY opened in Asia at 123.35 after the JPY made a broad recovery from historic lows against a number of currencies during the Lon/NY sessions. The JPY recovery story picked up steam in Asia amid talk of Japanese security houses and US funds selling decent amounts of EUR/JPY and NZD/JPY.
The EUR/JPY fell from 168.17 to 167.70 while the NZD/JPY fell from 96.30 to 95.55 during the session. The JPY buying on the crosses weighed on the USD/JPY and took it from the morning high at 123.49 to a low of 123.17 before settling between 123.20/30 for the balance of the session.
The EUR/JPY and NZD/JPY show signs of topping out in the short-term. The market is very short the JPY against those currencies and concern that the BOJ meeting might be a more "hawkish" event than previously expected could see some paring back of JPY shorts.
There is talk that some BOJ policy board members might vote for a hike and comments from Governor Fukui may have a hawkish edge. The move below yesterday's 167.90 low in the EUR/JPY ended an eight day sequence of higher daily lows suggesting that the EUR/JPY up move is losing momentum.
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