The USD/JPY pair traded in a narrow range with the beginning of the week, as the pair still moving within the same range for three weeks. On the other hand, risk aversion dominated the financial market amid the EU debt crisis development.
The euro retreated to its lowest level in eleven years against the yen, after Standard & Poor’s downgraded nine countries from the euro zone including France and Italy, where the 17 nation currency lost demand and dropped further against the dollar and the yen.
The USD/JPY pair is facing uncertainty regarding the outlook for the BOJ, where investors are waiting for any further intervention from the Bank of Japan which would be able to change the pair’s outlook.
Also the current development in the EU crisis will force the market sentiment to lean to the lower-yielding assets, such as the yen and the dollar which will increase pressure on the Japanese currency and fuel expectations of further action from the BOJ.
On Tuesday at 23:50 GMT (Monday), Japan will release the Tertiary Industry Index for November, where it’s expected to come at -0.4% compare to the previous reading of 0.6%.
The U.S. Empire Manufacturing for January will be released at 13:30 GMT, where the previous reading was 9.53 and expected to improve to 10.50.
Originally posted here
