Forexpros – The euro advanced to a one-week high against the yen on Tuesday, as demand for riskier assets was boosted after better-than-expected U.S. housing data and concerns over the debt crisis in the euro zone eased.
EUR/JPY hit 102.08 during European afternoon trade, the pair’s highest since December 13; the pair subsequently consolidated at 102.11, gaining 0.65%.
The pair was likely to find support at 101.03, the low of December 15 and resistance at 102.71, the high of October 5.
The euro added to gains after government data showed that U.S. building permits rose more-than-expected in November, climbing to the highest level since March 2010, while U.S. housing starts also rose more-than-expected.
The single currency strengthened broadly earlier after German research institute Ifo said that its Business Climate Index rose to a seasonally adjusted 107.2 in December from 106.6 the previous month, confounding expectations for a decline to 106.0.
Elsewhere, Spain saw short-term borrowing costs fall sharply as the country’s Treasury sold more than the targeted amount of EUR4.5 billion in an auction of three and six-month government bonds earlier.
But concerns over the debt crisis in the euro zone lingered after European Central Bank President Mario Draghi reiterated Monday that the bank’s bond purchasing program was temporary and warned the region’s economy was likely to enter a recession by early next year.
European Union finance ministers agreed Monday to provide EUR150 billion in loans to the International Monetary Fund to help tackle the regions debt crisis, but fell short of the overall EUR200 billion target.
The yen was higher against the U.S. dollar with USD/JPY shedding 0.22%, to hit 77.87.
In Japan, the government said earlier that it will increase its currency intervention capacity to JPY195 trillion, in order to stifle any signs of excessive yen strength.
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