The market is taking the news that Japan may step in to support equity prices as a sign to sell more yen. “Price keeping operations” have had limited success in the past and show a certain level of desperation on the part of a very unpopular Japanese government.
97.40/45 resistance was tested a short while ago and now prices are consolidating their gains. JPY bulls say Japanese exporters are under hedged and may need to sell dollars into strength but given the lousy export data in recent days, it is a wonder they have to hedge at all.
EUR/JPY is rebounding, as is EUR/USD. EUR/USD dipped below 1.2700 triggering stops around the time of the 16:00 GMT fixing. We dipped to 1.2691 and we now trade at 1.2739.
