EUR/JPY consolidating in lower half of recent range

In the post G7 world, EUR/JPY has traded in a 132.25/141.65 range. We’ve spent the bulk of the last two sessions in the bottom half of that range. Resistance is building in the 137.25/35 area as focus shifts to the 133.35/55 zone that has contained dips over the last few sessions. As always, it seems, equities will be the dominant force on the markets. They are in recovery mode at the moment.

Housing starts are the early economic focus. Let’s hope they’re zero. We’ve got plenty, thanks.

EUR/JPY probes Fibo as stocks slip further

I’m not sure if stocks were expecting miracles from Bernanke, but they have fallen further since he began speaking. They syd down more than 4% at writing.

EUR/JPY briefly probed through Fibo support at 136.95/00 before rebounding. A sustained break of 136.95 should open the way for a deeper dip to 135.85.

Stock slide accelerates, EUR/JPY dips slowly

The Dow has given back 200 points of Monday’s 900+ point rally but EUR/JPY is not much worse off than when stocks were dipping just below break-even. Dealers say good Japanese selling at 103.00 earlier in the session prompted some to sell with them and know they are able to pick up USD/JPY on the cheap. Since dipping below 101.85, USD/JPY has found fresh buying at 101.55. Offers are eyed on bounces now to 101.85/90.

Significant central bank selling in EUR/JPY on rallies

Dealers note strong selling by Mid-Eastern and Far Eastern accounts on strength this morning, helping keep the cross from straying too far from the 38.2% fibo of the decline from 156.60 at 141.54 this morning. A clean break of this area will open the way for a further retracement to the 50% level at 144.42.

The global bank bailout continues to have the desired effect; loosening up credit markets, spurring an equity rebound and reviving commodity markets pummeled by fears of a global recession.

EUR/JPY reaches 38.2% retracement

EUR/JPY’s recovery has reached 38.2% of the drop from 156.58 to 132.25. The 50% retracement is up at 144.42 if levels above 141.54 can be sustained.

Text of G7 statement on Forex

“We reaffirm our shared interest in a strong and stable international financial system. Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.

“We continue to monitor exchange rate markets closely and cooperate as appropriate.

“Given China’s important role in the global economy we encourage the authorities to allow accelerated appreciation of the RMB effective exchange rate as a means of further rebalancing of the domestic economy and promoting external stability”

The Japanese finance minister was quick to pounce on the disorderly and volatility part, suggesting they are in fact on guard over the recent surge in JPY strength.

USD/JPY bid has tongues wagging

We heard a rumor several hours ago and it has since been repeated on CNBC so I guess its safe to consider in the open: talk is that Mitsubishi will buy all of Morgan Stanley rather than the 20% that they agreed to last week. The fact that USD/JPY has hardly budged to the downside despite a sharp slide in EUR/JPY and renewed selling in stocks (now down 475). Putting twp and two together, the MUFG/MS rumors sound plausible.

GBP/JPY seeing relief rally, aided by CB buying

GBP/JPY is bouncing back this morning as markets breath a rare sigh of relief. Helping matters is talk of buying from a quasi-central bank at the 1.7360 level in cable. Offers in USD/JPY are seen at 101.50, as noted earlier, but stops are mixed in from short-term specs, dealers say.

Improved markets see EUR/USD close gap further

The gap opened early in Asia on Monday after the European banking crisis came to the fore has been largely closed but their remains about 15-20 pips from 1.3755 up to around 1.3770/75. Stops are seen mixed in with sell orders in the 1.3775/85 region, dealers report. Firmer equities into the close are seen lifting EUR/JPY and other battered JPY crosses along with them

Stocks loss further ground ahead of Bernanke speech

Bernanke is getting ready to address a gathering of business economists (woohoo!) in Washington. The markets seem to be trying to send him a message as he gets ready to speak. We won’t be satisfied until we get a rate cut (if then) so we’re just gonna sell ’til we get our way. Any parent of a three-year old will recognize that behavior.

EUR/USD is under-performing EUR/JPY to the downside this afternoon. EUR/JPY and USD/JPY are holding a fair amount of their rebounds after yesterday’s bloodletting.