JPY consolidated in the European session. USD/JPY held on a supportive footing, while EUR/JPY traded off its overnight highs. USD/JPY was buoyed by a softer than expected Japanese CPI release and a hawkish Greg Ip article in the WSJ. USD/JPY traded higher in early Europe, yet struggled to overcome 121.60 amid Tokyo name offers.
The pair drifted and was dragged lower in the wake of EUR/JPY selling. European fund selling was noted, with a UK clearer and a German name with the order. EUR/USD weakness also weighed and the pair traded down to the 156.70 area. Pullbacks were contained by retail investor demand out of Asia and proprietary name bids. In general, both USD/JPY and EUR/JPY experienced relatively quiet trade compared with recent sessions.
USD/JPY bias is skewed to the topside, yet momentum is struggling due to an overhang of offers. Bid interest between 121.20 and 120.00 should support any pullback. EUR/JPY is expected to find bids between 156.75 and 156.50, with stops below the latter. The European session will focus on durable goods and US new home sales. USD/JPY strikes are noted at 122.00.
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