JPY remained on the defensive. The crosses led the early European action, with decent EUR/JPY demand from model funds and speculative accounts driving price action. The cross traded up towards 158.00, yet met ongoing selling pressure from a European account and a Japanese name. Ongoing persistence saw a 158.02 high but the pair eventually pulled back into 157.85/90 on profit taking.
USD/JPY was buoyed by the cross demand, yet rallied on its own steam. Offers at 119.05/10 gave way and the pair eventually cleared 119.25 stops on the way up to a 119.45 high. Option related offers and exporter interest fueled a small pullback but the tone remained supportive amid a positive technical picture after the 119.25 breach. JPY sentiment remains bearish, with expectations of low Japanese rates fueling ongoing carry trade interest.
The afternoon session may take some of its focus from a plethora of US data. Although, the main highlight of the week is Friday's US NFP data and any movement is likely to be contained. Both pairs are expected to target topside levels; USD/JPY 119.50 and EUR/JPY 158.00.
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