Forexpros – The euro traded close to a one-month low against the yen on Tuesday, amid sustained euro zone debt concerns while the yen remained supported after the Bank of Japan refrained from additional easing measures.
EUR/JPY hit 105.96 during European afternoon trade, the pair’s lowest since March 4; the pair subsequently consolidated at 106.32, shedding 0.46%.
The pair was likely to find support at 105.42, the low of February 22 and resistance at 107.45, the day’s high.
Sentiment on the euro was hit amid as concerns over high Spanish borrowing costs intensified as the as the yield on 10-year government bonds ticked up to 5.9% from 5.8% earlier, amid fears that the country will be the next in the euro zone to require a bailout.
The increase came in spite of reassurances form Spanish Prime Minister Mariano Rajoy earlier that the country will cut its budget deficit to 3% of gross domestic product in 2013.
Sentiment on the single currency was also hit following a report showing that investor sentiment in the euro zone dropped this month, after three successive monthly increases.
Sentix said its index of investor confidence declined by 6.5 points to minus 14.7 in April from March’s reading of minus 8.2. Analysts had expected the index to improve modestly by 0.1 points to minus 8.1 in April.
Meanwhile, Friday’s weaker-than-forecast U.S. employment data continued to cast doubts over the strength of the country’s economic recovery.
Earlier in the day, the Bank of Japan held its benchmark interest rate close to zero and left its JPY30 trillion yen asset-purchase fund unchanged, in a widely expected move.
The central bank said that no board member proposed additional easing at the two-day meeting concluded on Tuesday, although investors expect fresh measures to be announced at the bank’s next policy meeting on April 27.
Elsewhere, the yen was also higher against the U.S. dollar with USD/JPY declining 0.53%, to hit 81.05.
Also Tuesday, official data showed that French industrial production rose by 0.3% in February, slightly more than expectations for a 0.2% increase, easing concerns over the economic outlook for the euro zone’s second largest economy.
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