Forexpros – The U.S. dollar was higher against the yen on Tuesday, as comments by the International Monetary Fund weighed on the yen, while sustained concerns over the handling of Spain and Greece’s financial woes supported safe haven demand.
USD/JPY hit 79.61 during early European trade, the daily high; the pair subsequently consolidated at 79.66, adding 0.26%.
The pair was likely to find support at 79.10, the low of June 9 and resistance at 80.06, the high of May 23.
The yen weakened earlier, after the International Monetary Fund said the currency was “moderately overvalued,” and indicated that it supported Japan’s view on yen weakening interventions, given current market conditions.
Meanwhile, Bank of Japan Governor Masaaki Shirakawa said he welcomes efforts made by Asian countries to enhance exchange rate flexibility, adding that Japan’s financial system has remained mostly stable throughout the financial crisis.
Safe haven demand remained supported amid concerns over Spain’s recently announced financial bailout, as the exact amount Madrid is to receive to recapitalize its banks will only be decided later this month, after the results of independent audits are published.
In addition, questions remained over the source of the funds and whether the bailout repayments would add to the country’s already high borrowing costs.
Uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, also weighed on market sentiment.
Elsewhere, the yen was lower against the euro with EUR/JPY rising
0.53%, to hit 99.71.
Also Tuesday, government data showed that tertiary industry activity in Japan fell unexpectedly in April, ticking down 0.3% after a 0.6% decline the previous month. Analysts had expected tertiary industry activity to rise 0.4% in April.
Later in the day, the U.S. was to publish official data on import prices as well as a government report on federal budget balance.
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