JPY consolidated in quiet European trade. For the most part, USD/JPY and the JPY crosses maintained their broader trading ranges. USD/JPY was underpinned by a broadly firmer dollar, with interbank names and speculative account demand overcoming 119.00 offers from CTAs. Stops were filled at 119.05 and 119.10 as the dollar buying gained momentum. The pair overcame 119.20 technical resistance to record a 119.26 session high before consolidating around 119.20. EUR/JPY experienced sideways movement after struggling to overcome 150.00 offers.
German and French name sellers were noted amid reports of real money based hedging ahead of Wednesday's large coupon and redemption payment. Japanese retail investor demand was a supportive influence, with decent demand noted through AUD/JPY, GBP/JPY and EUR/JPY.
The potential for decent movement over the next day or two is likely to be reduced ahead of Wednesday US FOMC announcement. We expect range bound EUR/JPY activity, while USD/JPY should benefit from a slightly more hawkish US rate perception after an editorial from WSJ's Greg Ip. Focus is on USD/JPY offers from 119.35 up to 119.50. RB.
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