Forexpros – The U.S. dollar edged higher against the yen on Wednesday, as a decision by the Federal Reserve not to increase the size of its stimulus program supported demand for safe haven assets.
USD/JPY hit 78.05 during early European trade, the pair’s highest since December 5; the pair subsequently consolidated 78.02, inching up 0.03%.
The pair was likely to find support at 77.68, the low of December 5 and resistance at 78.27, the high of November 29.
At its final policy meeting of the year, the Fed noted modest improvement in the U.S. economy but added that market turbulence in the face of Europe’s debt woes posed a big risk.
Fed officials reiterated that short-term interest rates are likely to stay close to zero until mid-2013 at least.
Markets were also jittery hit after German Chancellor Angela Merkel reiterated her opposition to increasing the EUR500 billion lending limit for the permanent euro zone bailout fund, the European Stability Mechanism, which should come into effect from the middle of next year.
Meanwhile, Italian borrowing costs rose back above 7% ahead of an Italian government debt auction later in the day.
The yen was higher against the euro with EUR/JPY declining 0.07%, to trade at 101.61.
Later in the day, the U.S. was to produce official data on import prices and crude oil stockpiles.
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