Forexpros – The euro was down against the yen on Wednesday, trading close to an 11-year low, after ratings agency Fitch said that the European Central Bank should do more to avoid a ‘cataclysmic’ collapse of the single currency.
EUR/JPY hit 97.60 during European afternoon trade, the pair’s lowest since Monday; the pair subsequently consolidated at 97.78, shedding 0.40%.
The pair was likely to find short-term support at 97.26, Monday’s low and an 11-year trough and resistance at 98.37, the session high.
The euro weakened after Fitch Ratings said the European Central Bank needs to do more to prevent the collapse of the euro, saying the bank should step up its bond purchasing program to support troubled euro zone states.
Elsewhere, revised data showing that the euro zone’s economy grew less than initially expected in third quarter of 2011 underscored fears over impact of the region’s financial crisis on the outlook for growth.
Eurostat said that the euro zone’s gross domestic product rose by a seasonally adjusted 0.1% in the third quarter, down from a preliminary estimate of 0.2% and slowing from growth of 0.8% in the preceding quarter.
Markets were also jittery ahead of Thursday’s ECB policy meeting and government bond auctions by Spain and Italy later in the week.
But the single currency found support after German Chancellor Angela Merkel said Germany would be prepared to pay more capital into the European Stability Mechanism fund when it is launched later this year.
The euro was also lower against the U.S. dollar, with EUR/USD shedding 0.59% to trade close to a 16-month low at 1.2702.
Also Wednesday, Bank of Japan Governor Masaaki Shirakawa said governments must implement “necessary” reforms to aid the global economy, adding that the yen’s strength will “hurt the Japanese economy in the short term,” after the central bank lowered its economic assessment for a second straight month in December.
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