The USD/JPY opened in Asia around 121.90 and came under pressure due to EUR/JPY, GBP/JPY and AUD/JPY selling out of Asia. The USD/JPY traded down to 121.83 when a few stops were triggered in the EUR/JPY below 167.85, but solid USD/JPY bids at 121.80 discouraged attempts lower.
The USD/JPY proceeded to make a hefty bounce back to 122.19 when the JPY crosses turned around with the EUR/JPY trading back to 168.34. Sellers ahead of 122.30 capped and the USD/JPY settled back between 121.90/122.00 for the balance of the Asian session that was quieter than usual due to the Tokyo holiday.
Traders speculate that some of the JPY buying this morning was a delayed reaction to the news that Iran would start taking Japan oil payments in JPY only. The effect soon wore off due to the fact that it only affects around 10 BLN USD worth of flows per year.
In any case the USD/JPY appears poised to move lower after completing a key outside week reversal lower on Friday. There are stops below 121.80 and a break below targets the top of the daily cloud at 121.10/15.
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