Tokyo, Feb 28. With Japanese USD/JPY, EUR/JPY and other JPY cross buying looking to have abated somewhat, some players believe these pairs may have seen their highs for the session. Japanese importers, retail investors and margin players were all seen selling JPY earlier. With USD/JPY at levels not seen since mid- December, this is not all that surprising. Importers also had quite a bit to do to settle accounts at month-end. As to investment trusts, fresh and on-going launches look to have attracted quite a bit of demand. These flows look to be history now with good-sized offers noted on the way up and especially at 118.70- 80 in USD/JPY, just shy of the 100-day moving average at 118.89 which was pierced to the downside for the first time since December 13 yesterday. USD/JPY looks to have peaked out around 118.70, EUR/JPY at 156.85/90. Both pairs are trading a bit easier at 118.53/57 and 156.65/70 currently. Support in USD/JPY is seen initially in the 118.25-35 area, a congestion zone earlier today. More support is eyed at 118.00 and then at the overnight low of 117.50. 117.30-40 remains key support, 117.34 the 200-day moving average and 117.37 61.8% Fibo retracement of the 114.43-122.20 move seen between December 5 and January 29. EUR/JPY sees support at 156.50-55, 156.51 the top of its Ichimoku cloud, and then towards session lows just ahead of 156.00.

London, February 23. USD/JPY is little changed at the start of the US session after a lacklustre European morning. The pair is tied to a very narrow trading range, finding support around121.30, yet struggling to progress beyond 121.50. Option positions at 121.50 may be influencing price action, with little on the data front for traders to focus on.

Bias is still on the upside but there are reports of sizeable selling interest from 121.60 up to 121.80, which may hamper progress. Another failure at 121.60 could increase the risk of a pullback, with a number of accounts happy to book profits after a decent run higher over the last few sessions. Japanese name interest has been noted at the highs and could accelerate at we enter the weekend.

Strikes to note for today NY options cut include 120.00, 120.50, 121.20, 121.50, 122.00 and 122.25.

USD/JPY fell close to 119.75 on a NHK report that BoJ Governor Fukui had proposed an interest rate hike at the on-going Policy Board meeting. Prior to this news, USD/JPY had traded up to as high as the 120.55 level as specs hunted for stops to the upside. Some were tripped but the market traded lower thereafter on profit-takes by these intra-day players. The NHK report subsequently took the market lower. Although a 25 bp interest rate hike by the BoJ is by no means a signal to buy JPY, especially with many prepared to sell onany rally, talk of very hawkish comments from the BoJ Governor at his press conference later could help cap the upside going forward. Resistance is seen again around 120.50. Technicals show the market rejecting breaks above the Ichimoku tenkan and kijun lines at 120.54 and 120.59. This 120.50-60 level is expected to see even more resistance later. Support below is seen near the session lows and at 119.55, the low in Asia yesterday. More support is eyed around 119.00. USD/JPY currently trades 119.80/83.

Given the uncertainty of the BOJ decision tonight, there are mixed forecasts for the EUR/JPY performance tonight, but on bias, dealers still see any dip well supported, with a bias for further topside gains in the sessions ahead with yield spreads still working against the JPY and carry trades still attractive while risk aversion levels remain low. Dealers see the base of tonight”s trading range on EUR/JPY at 157.05/10 while on the upside, the highs for the range tonight range from 158.60 to 159.20. EUR/JPY currently trades at 157.64. Slight profit-taking and position-squaring has seen the cross ease from morning levels of 158.00 to current levels of 157.67.

A Nikkei Financial front-pager highlights Japanese investment flows into the Russian ruble. From negative investment in 2001, Japanese direct investment in Russia and financial investment in RUR-denominated debt and stocks has taken off. This was especially the case beginning in 2005 and last year with total investments into Russia exceed Y120 bln in 2006. This is significant in that Japan and Russia still have not signed a peace treaty following World War II and given the to-do concerning Russia”s near nationalization of Sakhalin gas fields during the course of the past year. RUR/JPY has risen, reflecting the outward flows with the cross trading up from just above 4.00 at the beginning of 2006 to the 4.60 level currently. USD/RUR has moved down as well from just below 29 to just above 26 during the same period. Japanese banks are moving to manage these flows with Mitsubishi UFJ setting up a Russian subsidiary in November of last year. Mizuho looks to set up a similar entity this year. Toyota looks to set up a production line by the end of this year and Nissan has plans to do the same by 2009. Isuzu began producing trucks in Russia in July of 2006. Trading company Mitsubishi Corporation set up a distribution business in April of last year and Mitsui and Company looks to do the same by spring of this year. Nippon Express set up a subsidiary last July and Kirin Beer began production under a license last September.

Tokyo, Feb 13. USD/JPY continues to trade towards the low of the session at 121.55/58 currently. JPY cross heaviness looks to have played a part in the move down from an early high just shy of 122.00. Dealers also note some talk circulating in Tokyo of a possible under-the-table deal at the G7 whereby Japan promised angry European officials an interest rate hike in February. Conspiracy theorists argue that this may have been a reason behind the lack of mention of JPY in the communique which continued to name China. If the Q4 GDP data due on Thursday does prove to be strong and the BoJ does decide to hike interest rates on the 21st, JPY could see some more buy-backs. It seems the risks associated with these two events over the course of the next week may be enough to force JPY shorts to again pare down positions. Technical support below is eyed around 121.00, 120.99 the low last Friday. 121.03 is also where the Ichimoku tenkan line comes in today. USD/JPY currently trades 120.45/50

The combination of the MPC sitting on their hands and a hawkish Trichet after the ECB meeting resulted in the EUR/GBP roaring higher and the GBP/USD falling like a rock. Even though economists were overwhelmingly looking for the BOE to stay on hold, there was a growing view in the market that the BOE would surprise again with a 25 BP hike.

The fall in the GBP/USD to 1.9540 has validated key trend-line support that is drawn from the Nov 17 low around 1.8835 and connects again at the Jan 8 low around 1.9260 and 1.9540 yesterday. The trend-line moves up to 1.9550 today and if it closes the week below that level it would be a bearish event. The GBP/USD trades 1.9582/87.

we cover our short on second bounce from 120.50. profit 30 pips.