Forexpros – The U.S. dollar edged lower against the yen on Tuesday, as market sentiment slightly recovered after a conference call of European finance ministers but concerns over the region’s debt crisis continued to weigh.
USD/JPY hit 77.92 during early European trade, the daily low; the pair subsequently consolidated at 77.94, declining 0.13%.
The pair was likely to find support at 77.63, the low of December 13 and resistance at 78.23, the high of November 28.
Market sentiment improved after European Union finance ministers agreed on Monday to boost International Monetary Fund resources by EUR150 billion with the support of EU allies, in order to tackle the region’s debt crisis.
But investors were wary after European Central Bank President Mario Draghi reiterated that the ECB’s purchases of peripheral debt were temporary and “not infinite”, disappointing hopes for further bond buying.
He also said 2012 will be a difficult year for the euro zone’s banks, and recovery in economic activity in the region is likely to be slow.
Meanwhile, the yen remained under pressure after Japan’s government said it will increase its currency intervention capacity to JPY195 trillion, in order to stifle any signs of excessive yen strength.
Elsewhere, the yen was steady against the euro with EUR/JPY inching down 0.01%, to trade at 101.43.
Later in the day, the U.S. was to publish data on building permits and housing starts.
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