USD/JPY and the JPY crosses consolidated off the overnight levels in quiet European trade. EUR/JPY after recording a 159.63 overnight high traded defensively. The pair drifted lower early on and remained in the 159.20 area for a large part of the European session. Profit taking and position adjustment was behind the move lower, with a Japanese securities house and a couple of Tokyo names noted on the offer.
The downside was underpinned amid Japanese retail demand and bid interest from US fund names. USD/JPY experienced sideways movement after drifting from the 121.50 area. The pair traded into 121.30 and then recovered on small bid interest to hover around the 121.40 area ahead of the US open. Bias for both pairs remains on the topside amid reports of further investment trust demand as we enter March.
Activity is not expected to be as heavy as February, although a number of dates have been tipped for early March for possible JPY outflows. EUR/JPY will target 160.00, while USD/JPY will have to clear the 122.20 failure high before we can say with confidence that a move on the 124/125 area is in the offing.
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