JPY was mixed in the European morning. USD/JPY retained a heavier tone continuing the theme set in Asia, while EUR/JPY made modest gains. EUR/JPY was buoyed by good demand for EUR/USD, encouraging speculative demand and interest from technical accounts after the move through the 158.24 Asian high. The pair extended to 158.72, yet failed to extend gains amid an overhang of Japanese selling and sovereign based interest.
The cross retraced some of the gains amid real money sales coupled with a USD/JPY fall into the 121.00. USD/JPY was subjected to selling throughout the session amid a broadly softer dollar tone and some interest relating to USD 27 billion worth of coupon payments due tomorrow. The pair filled in stops below 121.00 and 120.90 but was unable to extend losses due to good Japanese demand.
Importers, real money names and a quasi-official name were mooted. Both pairs are relatively stable ahead of the North American open, with USD/JPY steady around 121.00 and EUR/JPY finding support around 158.35/40. Attention will turn to Bernanke's testimony and any remarks on growth prospects and medium-term inflation risks.
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