USD/JPY and the JPY crosses rose again in Europe, extending the Asian trend. Good Importer demand was noted and decent Japanese investment trust-related activity continued in Asia and into the European session, taking USD/JPY up to a 120.22 high. EUR/JPY traded up to the 158.10 area, although price action was choppy.
The pair fell into 157.60 early on in the European session amid option related selling but steady JPY selling pushed the pair higher. Large size 158.00 strikes left the pair in a narrow range around this level ahead of the North American open. USD/JPY was also held back by overstretched technicals and reports of large 120.00 strikes rolling off throughout the week.
Tomorrow's BoJ Policy Board decision was shrugged off despite the announcement being finely balanced. Investment houses are erring towards steady policy due to some weak spots in leading indicators, although some see the rate decision as a credibility issue for the BOJ. The central bank may assert its independence by hiking rates, while retaining a dovish statement, which would encourage further JPY selling. This was certainly the case today.
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