Forexpros – The U.S. dollar was trading close to a four-month low against the yen on Wednesday, as concerns over sovereign debt levels in the euro zone and the U.S. bolstered safe haven demand.
USD/JPY hit 78.85 during late Asian trade, the daily low; the pair subsequently consolidated at 78.93, shedding 0.29%.
The pair was likely to find short-term support at 78.45, the low of July 14 and a four-month low and resistance at 79.60, the high of the same day.
Earlier in the day, Japan’s Finance Minister Yoshihiko Noda said the yen’s gains were a reflection of concerns over sovereign debt in Europe and the U.S. more than a reflection of Japan’s economic fundamentals. He added that the government will take decisive steps on currencies if needed to stem excessive or volatile moves.
Meanwhile, Bank of Japan Deputy Governor Hirohide Yamaguchi said that the yen’s recent gains have not yet had a significant impact on corporate activity, but added that it has always been the central bank’s stance to take flexible and decisive monetary policy actions when needed.
The yen was also higher against the euro, with EUR/JPY slipping 0.19% to hit 111.85.
On Tuesday, U.S. President Barack Obama said there had been “some progress” in talks with lawmakers on raising the USD14.3 trillion U.S. debt limit, boosting optimism that a deal would be reached before the August 2 deadline.
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