Various factors look to have worked against USD/JPY overnight including heavy sales at the highs, lower US yields on flight to quality on subprime lending concerns and aggressive selling in some of the JPY crosses, including GBP/JPY and, to an extent, EUR/JPY. Other JPY crossesd remained supportive however with NZD/JPY in particular demand and AUD/JPY also holding its own.
USD/JPY saw a low of 117.22 overnight with recent longs having been forced to shed their positions. It seems a base of sorts looks to have developed near the low. Tokyo itself is likely to see more heated buys from Japanese importers today into the Tokyo with the pair lower by almost a yen.
That said, bulls are not ready to come back out of the closet just yet and heaviness is likely towards 118.00, a level which saw stops tripped on the way down. Initial support ahead of the overnight low is seen in the 117.40-45 area, 117.42 the early low. USD/JPY currently trades 117.55/60.
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