Forexpros – The euro was hovering close to a two-month low against the yen on Monday, as investors turned to a teleconference call of European finance ministers amid fears of credit downgrades in the single currency bloc.
EUR/JPY hit 101.63 during European afternoon trade, the daily high; the pair subsequently consolidated at 101.52, edging up 0.08%.
The pair was likely to find support at 100.74, the low of October 4 and short term resistance at 101.78, the high of December 16.
European Union finance ministers were to discuss plans to provide up to EUR200 billion in loans to the International Monetary Fund, as well as changes to the EU treaty that would allow a permanent EUR500 billion bailout fund to be established.
The euro remained under pressure as concerns over the risk of credit rating cuts continued to weigh after ratings agency Fitch lowered France’s credit outlook and put six euro zone countries on review pending possible downgrades on Friday.
Moody’s Investors Service also downgraded Belgium two notches.
Over the weekend, European Central Bank President Mario Draghi reiterated his opposition to intervening in the bond markets and buying up sovereign debt in order to ease the region’s debt crisis in an interview with the Financial Times.
Sentiment was also hit earlier following the announcement of North Korean leader Kim Jong il’s death, spurring fears of geopolitical instability in northeast Asia.
In Japan, Finance Minister Jun Azumi said he would monitor financial market moves following the death of Kim Jong il.
Also Monday, Japan’s government said it planned to trim its initial budget for the next financial year back to JPY90 trillion from this year’s record of JPY92 trillion.
Elsewhere, the yen was lower against the U.S. dollar with USD/JPY adding 0.16%, to hit 77.89.
Earlier in the day, the European Central Bank said that the euro zone current account recorded a deficit of EUR7.5 billion in October, swinging from a surplus of EUR2.2 billion the previous month.
Analysts had expected the region’s current account post a deficit of EUR1.9 billion in October.
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