JPY traded on a firmer footing as speculative accounts continued to reduce some of their exposure to short JPY positions. Japanese officials responded to recent pressure, suggesting that JPY would not feature as the main discussion at the G7 meeting. They asserted that the market should determine JPY values, yet added the standard line that forex movement should reflect fundamentals.
USD/JPY and the JPY crosses largely ignored the Japanese rhetoric and spent a large part of the session challenging interest on the downside. USD/JPY pushed on the 120.50 area and eventually took at bid interest from macro accounts and option names. The pair extended lower to trade through Japanese support at 120.40 to record a 120.36 low.
Reports of quasi-official interest emerged on dips and the remainder of the European morning resulted in slow price action close to 120.40, with technical based accounts and model funds running into Japanese name bids. EUR/JPY saw a similar pattern, trading below 156.80 after a number of failed attempts. Real money name support stemmed the losses, yet bias remains on the downside amid steady selling pressure.
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