Intra-day shorts cover USD/JPY positions ahead of the London close,forcing a move back into the 121.30/35 area. Early US pressure on the downside failed to overcome 121.00/10 bids, fueling profit taking by players that sold atthe start of the European session.
Sentiment wise little has changed as USD/JPY remains hemmed in by good two-way flows and a lack of directional bias. There was a distinct lack of interest fromhedge funds today but Japanese investors were evident in the JPY crosses. The interest failed to turn the pair higher though, with the topside weighed on by option sales and bond related hedging.
The 121.00 handle remains the key pivot in the near-term. Bids are in good size at this level and stops are noted below. The market will play the range until wesee a clean break of this level or spot can build enough momentum to break the recent trend high at 122.20.
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