USD/JPY extends gains as some speculative accounts have been notably joining the bid side after the earlier flurry of momentum fund demand after 120.20 stops gave way. The pullback in USD/JPY was brief and very limited as a bout of European based interest came into the market. The pair has traded up to 120.34, helped by straight USD/JPY demand and activity via the JPY crosses.
GBP/JPY has performed particularly well, with some bargain hunting noted after yesterday's downturn. EUR/JPY has been held back by large size 158.00 option strikes but bias is clearly on further gains. USD/JPY will target the previous 122.00 high over the next couple of sessions going by recent sentiment, although there is likely to be a pause in the topside as it moves towards the BOJ policy decision, which is due sometime in the early hours of tomorrow's session.
A steady policy would see acceleration in JPY selling, although most players believe that the BOJ has room to raise rates without drastically changing market sentiment especially if the statement is broadly dovish as many now expect it to be. The market is expected to target the previous the February 14th low at 120.65 initially. Offers are tipped at 120.35/40 and 120.50 ahead.
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