Forexpros – The dollar extended gains against the yen in Asian trading on Monday, buoyed by fears that potential credit downgrades in Europe will send investors scurrying to the safety of the dollar coupled with reports that North Korean leader Kim Jong Il has passed away.
USD/JPY was trading at 78.06, up 0.38%, slightly off from a session high of 78.16 and up from a low of 77.74.
The pair was likely to test technical support at 77.66 and resistance at 77.95.
Over the weekend, European Central Bank President Mario Draghi told the Financial Times he remained firm in his opposition to using monetary policy to easing the debt crisis.
Draghi and other bank officials have said moves such as buying government bonds goes against its mandate to keep inflation rates within comfort zones, adding politicians need to rely on their own emergency assistance funds and push through tough austerity measures.
Furthermore on Friday, Fitch Ratings warned it may strip France of its AAA ratings as well as downgrade six other European nations.
The agency said it revised France’s rating outlook as well as those of the other eurozone members on grounds that a “comprehensive solution” to the crisis is “technically and politically beyond reach.”
Early on Monday, reports emerged that North Korean leader Kim Jong Il had passed away, which sparked a knee-jerk demand for dollars across the globe.
Meanwhile, the dollar was up against the euro and the pound, with EUR/USD shedding 0.44% to hit 1.2986 and GBP/USD falling 0.45% to hit 1.5474.
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