Forexpros – The euro edged lower against the yen on Tuesday, after the European Central Bank failed to attract enough deposits from banks to neutralize its purchases of bonds from debt-ridden euro zone countries.
EUR/JPY hit 77.62 during European afternoon trade, the daily low; the pair subsequently consolidated at 103.55, shedding 0.28%.
The pair was likely to find support at 102.48, the low of November 25 and short term resistance at 104.51, the high of November 28.
The ECB attracted EUR194 billion in seven-day bank deposits, falling short of the EUR203 billion needed to offset its bond purchases. According to market participants, the shortfall was the first since May.
But the euro’s losses were limited after Italy’s Treasury auctioned EUR7.5 billion of debt. Although borrowing costs surged to euro-era highs, market sentiment found support as Italian bond yields came off the highs they hit ahead of the auction, with the two-year yield easing back below the 7% threshold.
Also Tuesday, euro zone finance ministers were expected to approve plans to enlarge the scope of the region’s bailout fund, the European Financial Stability Facility. They were also expected to sign off on Greece’s next tranche of financial aid.
In Japan, Finance Minister Jun Azumi pledged to achieve “more appropriate” yen levels, signaling that sharp rises in the currency will trigger additional monetary stimulus as slowing global growth clouds the outlook for the export-dependent economy.
Elsewhere, the yen was up against the U.S. dollar with USD/JPY shedding 0.21%, to trade at 77.79.
Later in the day, the U.S. was to release industry data on house price inflation as well as a report on consumer confidence.
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