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The Ipswich manager told the club website: "It's been a hard decision but we've decided not to continue our interest in Jimmy coming in.
"At his best, he did very well for us. Not at his best he was promising, but not yet ready for a regular place in the team and that's what made up my mind.
"We need now. We don't need tomorrow. We have lots of tomorrow. We have a very exciting academy and lots of exciting young players who we hope will be tomorrow but what we need now is the battle-hardened player. Probably someone who scores a few goals from midfield and will take us on to the next level."
Juan intially joined the Blues on a trial from Monaco at the end of 2004, before sigining a six month loan deal in January 2005 and then extending that by a year in the summer of '05, giving him an 18 month stay in Suffolk.
Despite leading the clubs goal charts for much of the second half of the season with five goals, including a memorable one at Carrow Road, Jimmy will return for talks with Monaco about securing his future outside of Portman Road.
Jimmy made his senior debut for Town in their first game of the 2005/2006 campaign against Cardiff and went on to play 34 times.