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Friday, April 06, 2007

Yen Outlook (5th April 2007)

USD/JPY and the JPY crosses traded a little way from their recent highs. Many players locked in profits and others pared positions ahead of the Easter holidays this weekend. USD/JPY struggled to trade above 118.90, with offers lowered to 119.00 and heavy gamma related interest between 118.50 and 119.00 today. Talk from Asia was that offers re-set from 119.00 are in a few yards, eclipsing whatever stops there are above 119.10, 119.25 and option barriers at 119.50.

Some light stops are eyed below 118.50 and 118.35 but bidding interest is seen trailing down to 118.20 and then 118.00, below which more stops are tipped. Japanese investors remain dip buyers and this encouraged some speculative interest, although amounts were not that heavy. EUR/JPY also struggled to regain 159.00, yet remained in a narrow range amid investor activity on dips.

The afternoon session should remain quiet due to a limited data schedule and pre-holiday position squaring. The broadly softer JPY should influence price action, although both USD/JPY and EUR/JPY are under threat on increased profit taking and liquidation towards the London close.

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