Forexpros – The U.S. dollar was lower against the yen on Tuesday, as mounting fears over a debt default by Greece and concerns over contagion in the euro zone supported demand for the traditional safe haven yen.
USD/JPY hit 76.92 during late Asian trade, the daily low; the pair subsequently consolidated at 76.94, shedding 0.35%.
The pair was likely to find support at 76.52, the low of September 2 and resistance at 77.58, Monday’s high.
Earlier in the day, market sentiment was boosted briefly after a report in the Financial Times said Italy’s Finance Ministry held talks with Chinese officials about “significant” purchases of Italian bonds.
Italian borrowing costs have risen significantly in recent weeks, amid uncertainty over the implementation of austerity measures.
Despite the report, Italian bond yields edged higher ahead of an auction of EUR7 billion of government bonds later in the day.
Meanwhile, fears over a potential Greek default and expectations for a ratings cut on France’s three largest banks, due to their exposure to Greek holdings, also weighed.
The yen was also sharply higher against the euro, with EUR/JPY tumbling 0.81% to hit 104.75.
Also Tuesday, Japanese Prime Minister Yoshihiko Noda reiterated that the government and the central bank need to “take all policy steps available” to curb the strength of the yen and protect Japan’s export driven economy.
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