… lending rate decision from
the FOMC tomorrow.

The Dawn Of Inflation
No surprises from the Bank of Japan today as they kept their
ultra-loose monetary policy unchanged. What did catch traders attention
however was the bank's indication that a rate change would be needed
in the near future. Supporting this claim was an upgrade to the their
outlook on price growth which suggests that inflation would return the
world's second largest economy by the end of the fiscal year in March.
Taking the wind out of this positive piece of news, were comments from
BoJ governor Fukui in which he said even if even were the zero interest
rate policy to come to an end, the pace of hikes would be slow with long
periods of low lending rates in interim.

Rumorville
After the strongly held 116.25 option barriers were taken out during
intraday trading, traders with stops and open options positions higher
up looked to hold the market back. Yen bids have edged off the strength
in the pair's rise with large offers hovering at 116.45/50. Word of
mouth has it that these orders are guarding large option barriers at
116.50 that if breached could send the pair on another leg up.

Technically Speaking
After making quick work of both the significant 116.00 and 116.25
levels, price action has began to form an ascending triangle in the less
volatile hours. Attempts at the psychologically significant 116.50 have
been cut short multiple times, suggesting dollar bulls are adamant to
get through this level. If a break occurs, large resistance doesn't
come into the picture until 117.75. If yen bids can hold back the
flood, a turn to 116.00 would be a first stop with strong yen bids
sought at the bought trend channel at 115.30/50.

EURUSD

Fundamental Factors
Going into month's end, the euro single currency was heavily
suppressed during the session as HIA related repatriation, missing last
week, returned this week. Additionally, with tomorrow's Federal
Reserve policy meeting and the expected furthering of the current
monetary tightening policy, traders pared back long euro positions but
look to potentially return later in the week.

Potential Acquisition
Additionally affecting the market looked to be the announced bid by
Spain's Telefonica for the U.K. based 02. The bid for the mobile
operator totals $31.3 billion in cash and served as the final point in
convincing the massive paring overnight. Coupled with lower dips in oil
prices on the session below the $60 a barrel mark and a positive close
for U.S. markets, traders saw no real reason to build euro coffers.
However, further selling may be capped at this moment as the price
action hovers solid support of the recent range conditions in the
market. Additionally, potential central bank buying interest has been
hinted above the current level.

Technically Speaking
Consolidating at the moment, the price action looks to be resting after
the considerable downturn in the pair. As mentioned above, with the
currently longer term range trading conditions that we have been seeing
as of late, short interest may have dissipated as traders consider
flipping positions to the long side. Contributing to the notion has
been whispers of central bank bids above. As a result, the first test
to the upside looks to be the 23.6 percent fib level from the three day
move. Any penetration would ultimately lead to a test of the 38.2
percent fib level at 1.2046. Additionally contributing to the upside is
the golden cross in the Stochastic oscillator. However, at this point,
a peek above the 20 reference would be required before the directional
bias can be confirmed. As always, a break below current support would
lead to a near term test of the intrasession spike low.

Sending money abroad? Converting currency?