Forexpros – The euro was trading close to a five-week low against the yen on Wednesday, as ongoing worries over potential debt contagion in the euro zone dampened demand for the single currency.
EUR/JPY hit 103.41 during European afternoon trade, the pair’s lowest since October 10; the pair subsequently consolidated at 103.91, shedding 0.36%.
The pair was likely to find support at 102.72, the low of October 10 and resistance at 104.92, the high of September 29.
The euro found support as the European Central Bank eased pressure on regional bond markets by buying Spanish and Italian government debt.
But the yield on Italian 10-year bond remained close to the 7% threshold which is widely viewed as unsustainable in the long term. Spanish 10-year yields eased off Tuesday’s three month high.
In Italy, incoming Prime Minister Mario Monti was due to meet with President Giorgio Napolitano to officially accept the post and present his new government.
Meanwhile, the Bank of Japan left interest rates unchanged earlier, close to zero.
In a press conference, the BoJ cut its economic assessment as Governor Masaaki Shirakawa said the euro zone debt crisis posed the biggest threat for the nation’s export-led recovery.
The bank also said that it may implement new stimulus measures if the yen resumes its strong gains after the currency climbed to postwar highs against the greenback last month.
The yen was also up against the U.S. dollar with USD/JPY shedding 0.12%, to hit 76.93.
Also Wednesday, official data showed that the rate of consumer inflation in the euro zone remained unchanged at 3% in October, in line with expectations.
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