JPY was under pressure throughout the European morning. Demand relating to month end settlement and investment trust launches left JPY under persistent pressure. USD/JPY cleared large 119.00 offers, barriers at 119.20 and stops above 119.25 to record a 119.29 high. EUR/JPY was able to post a strong rally from the 161.00 area to record a fresh all time high of 162.55 before falling away amid good size EUR/USD selling.
Some of the USD/JPY gains came late on in the European morning amid broad based stop loss buying of USD. This leaned on EUR/USD and helped USD/JPY into the upper end of the broad trading range. EUR/JPY was left mid range around 162.30 ahead of the US open. Interest is expected to dissipate ahead of the Golden Week holidays, although tomorrow's key Japanese data and the semi-annual report from the BOJ could add to the JPY's woes.
Inflation is expected to be well contained and the central bank should continue to highlight a gradual approach to rate tightening. This should pave the way for a fresh run on 120.00 and extended EUR/JPY gains.
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