Both USD/JPY and EUR/JPY are moving a little higher despite the current down bias. Dealers attribute the moves up to short-covering. This is especially the case in USD/JPY which plunged over a yen in New York. Some intra-day specs may be playing the market from the long side as well, perhaps counting on Japanese importer dip-buying. It is true that the 116-handle has not been seen since September 26, and some importer buying has been noted. However, this interest does not look to be all that strong with few standing bids seen below. USD/JPY sees initial topside resistance in the 117.00-10 area, 117.05 the top of the Ichimoku cloud. Support below is seen at 116.60-70, 116.62 the low overnight. Stops are eyed below.

San Francisco, October 30. Despite the plethora of Japanese data releases tonight, including employment and household spending and irregardless of the BOJ outlook report, dealers expect USD/JPY to continue to range trade in Tokyo trading overnight. The base of tonight”s range is tipped from 117.20 down to 116.90 while the top of tonight”s range is forecast from 117.50 to as high as 117.80. Some stops are reported at 117.70 but sellers remain on the approach of 118.00.

Traders continue to see USD/JPY as heavy however, with central banks now building JPY reserves and with concerns over carry trades. The record level of JPY shorts on the IMM is also seen weighing on the currency. USD/JPY currently trades at 117.42.

The JPY staged a stunning rally on Friday on reports that the SNB has started to shift some of their USD reserves into JPY holdings joining the Russian central bank who announced the same thing weeks ago. The USD/JPY spent the start of last week on an upward plane before stalling out at 119.65 thus making the elusive 120 a bridge too far for the huge amount of USD/JPY longs among the speculative community. The JPY appeared to be on the ropes ready to take a standing 8-count after weaker than expected Japan data on Friday cemented the view that the BOJ would stay on hold for the rest of 2007. The EUR/JPY spiked up to a new all-time high of 150.80 and the USD/JPY jumped to 118.70 in the wake of the data. The turnaround was breath taking as the USD/JPY fell like a stone to 117.15 after the story around the SNB reserve switching made the rounds and the US GDP came in weaker than expected. The EUR/JPY fell from 150.80 to as low as 149.35 before closing around 149.80 to complete a key outside day reversal lower.

Once again the IMM data showed JPY shorts at a new all time record 137.2k, as the JPY remained the funding currency of choice for investors seeking yields through “carry trades”. The report that the SNB was shifting some of their USD reserves into JPY forced fresh long USD/JPY and EUR/JPY positions taken in the wake of the weak Japan data on Friday to head for the hills. The effects of the SNB news might wear off in the same way as the news that Russia did the same a few weeks ago, but the 120 level in the USD/JPY is difficult to imagine in the current environment. There was talk during the US session of very large bids from option and Japanese names ahead of 117.00 with very large stops building below 117.00. This week sees key data from both sides of the Pacific with the main event being the US non-farm payroll data on Friday.

The [EUR/JPY] staged a key outside day reversal on Friday that was amplified by the fact that it was done after the EUR/JPY made an all-time high. Support for the EUR/JPY is found at the daily tenkan line at 149.60 while key support is found at the top of the Ichimoku cloud and the kijun line that converge around 149.25. A break below 149.25 targets the bottom of the cloud at 148.25. Hourly resistance has formed at 149.85 and a break above would take the pressure off of the downside and result in a gap getting filled towards 150.10/20. The [USD/JPY] plunged below good support around 118.00 on Friday and this level will now be resistance. Major support is found at the top of the daily Ichimoku cloud that comes in around 117.00. A break below 117.00 targets the 100-day MA around 116.65.

New downtrend has worked through oversold hourlies and broken below 118.65 Fibo support and the Oct 23 low at 118.55. Daily studies are mostly in sell mode with room to run. Selling rallies is favored, with 119.00 now our preferred entry point. Key supports are in the 118.00-05 range from the Oct 19 swing low and 50% Fibo

Tokyo, Oct 25. The 25th of each month usually sees more demand for foreign currency on the back of Japanese importer settlements but this does not look to be the case this morning with both USD/JPY and EUR/JPY actually trading off from earlier highs. USD/JPY is currently indicated at 119.26/29 and EUR/JPY at 149.84/88. USD/JPY was earlier seen as high as 119.43 and the cross just under 150.00. Japanese importers are still seen having good interest in the two pairs on dips. In USD/JPY, dips towards 119.00 and below will likely be bought. Japanese exporters, for their, show some interest to sell USD/JPY towards 120.00 but many are still holding out for higher levels. In EUR/JPY, a smattering of offers are seen ahead of 150.50 but many here are also holding out for higher levels.

USD/JPY and other JPY crosses remain bid with JPY still the funding currency of choice. Interest was on the light side but dealers noted continuing demand for GBP, AUD and NZD from Japanese retail investors. This helped to maintain upward pressure in GBP/JPY, AUD/JPY and NZD/JPY. EUR/JPY maintained a supportive tone as a result of the firmness in these JPY crosses. USD/JPY was buoyed by the dollar bid tone into today”s US FOMC meeting. The pair traded close to the 119.50 region throughout the European morning. A US investment house was a good buyer, although gains were stymied by sovereign name selling and large Japanese sell orders from 119.60 up to 119.90. A large 119.50 option strike also restricted price action, leaving choppy price action around the 119.50 pivot. Near-term price action is expected to favour the dollar, with traders positioning for a hawkish Fed statement. Japanese rate hike expectations have also been reduced, which should see USD/JPY as the main beneficiary for intra-day flows. Defensive selling ahead of 120.00 should increase as we approach 119.75/80, with a concentration of sellers ahead of these triggers

Tokyo, Oct 23. USD/JPY looks somewhat better bid, opening the session well above the 118.41 high seen in Asia on Friday. It is currently indicated at 118.60/63, not far from the 118.80 high seen in New York on Friday. Cross plays are seen to have been supportive overseas on Friday with GBP/JPY up above 223 and close to August highs, EUR/JPY moving back up towards 150, AUD/JPY breaking above 90 and NZD/JPY achieving a foothold on 79. In the latter two crosses, heavy resistance was seen ahead of option barriers tipped at 90 in AUD/JPY and on profit-taking above 79.00 in NZD/JPY. Buoyant crosses are likely to keep USD/JPY relatively bid in Asia today ahead of the two-day FOMC which begins tomorrow. The FOMC meeting is likely to be the highlight of the week. Recent comments from Fed officials have been on the hawkish side. The last minutes released also showed two district Federal Reserve banks asking for a hike in the discount rate. The market will be very focused on what FOMC Chairman Bernanke has to say. USD/JPY stops are eyed on break-backs above 118.80 and 119.00. Downside stops are still eyed below 118.00, a level now presumed to hold some option barriers. The low last week was limited to 118.05 on Thursday

NY traders expect to see USD/JPY consolidate its losses in Tokyo tonight with only limited follow-through selling expected. Dealers tip a low of 117.90 during Asian trading but one dealer says that option defense of a 118-120 double-no-touch will likely stall any further downside with lows of 118.05 seen so far today. On the topside, offers at 118.30 to 118.50 are expected to cap gains, where stops were triggered on the move lower today.

USD/JPY continued to trade soggy in early Asian trading with the pair break below the overnight low of 119.01 and stops below 119.00. The downside was limited however with news of another possible North Korean nuclear bomb test soon absorbing the effect of the stops and fresh shorts put on intra-day specs. Japanese importers and option players were also seen buying at the low. From 118.93, USD/JPY later bounced to 119.13. It remained in the lower- 119 area for the remainder of the session with dealers eyeing a slew of US data releases tonight including PPI, industrial production and Treasury international capital flows. USD/JPY stops are still eyed below 118.80 with more seen building below 118.50. Some bids are eyed ahead of 118.50 with Japanese institutional investors in particular waiting for dips to this area. EUR/JPY remained better bid in Asia, trading up from 149.15 to 149.33 on the back of the North Korean news. The 149.00-10 area looks to be shaping up as a buy level what with the Ichimoku kijun line at 149.08 and the top of the cloud at 149.06. The kijun line has proved to be a good buy-level in the past.

USD/JPY opened in NY 119.11/16 weighed down overnight by the news Russia was adding JPY to its foreign currency reserves. US investment and trading banks along with custody and European names were among the sellers but were met with good Japanese bids at 119.01. Good buying orders remain at 119.00 but stops are said to lie under 119.00 and are staggered down to 118.00. US data was positive with strong gains in the NY Empire State Manufacturing index and with hawkish comments from Fed”s Poole. Bounces were capped at 119.30 with price action caught in a 119.01-30 range. The option defense remains at 120.00 and 120.50 but traders still see a risk for USD/JPY to test those levels if core US CPI and PPI, due this week, are high.

EUR/JPY was more bearish with the cross testing the top of the Ichimoku cloud at 149.01 for the first time since March. The cross was capped at 149.30 in NY with comments from EU Alumnia asking for more flexible Asian forex pushing EUR/JPY lows to levels just under 149.00. Traders are more bearish EUR/JPY then USD/JPY after the continued recent failures to break 150.50.