JPY consolidated after the moves seen late last week. Focus is turned to tomorrow's BOJ policy announcement, leaving prices range bound. USD/JPY was unable to sustain a move higher overnight and this left a defensive tone in European trade. USD/JPY tested the downside but never extended beyond 117.70, where good size bid interest was noted out of Asia.
Importer demand and light institutional investor demand was seen. The pair spent the remainder of the session hovering around 117.80. EUR/JPY traded on a supportive footing after recovering from Friday's 153.80 lows. The pair struggled to trade beyond 154.70 amid reports of light selling from leverage funds and speculative accounts looking to pare back exposure ahead of tomorrow's BOJ meeting.
No change in BoJ policy is eyed when the Policy Board makes its decision tomorrow, the majority of Tokyo pundits still see action in January, and this may help to temper further JPY selling. USD/JPY sees Japanese exporters offers from 118.15/20 increasing in size from 118.30 up to 118.50. EUR/JPY is underpinned ahead of 154.00, yet offers are noted from 154.70/75 and ahead of 155.00.
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