Forexpros – The U.S. dollar rose to a two-day high against the yen on Tuesday, as sentiment slightly improved ahead of the release of highly anticipated euro zone and U.S. data, while expectations for fresh easing measures in Japan weighed on the yen.
USD/JPY hit 78.60 during early European trade, the pair’s highest since August 10; the pair subsequently consolidated at 78.57, rising 0.32%.
The pair was likely to find support at 78.03, the low of July 31 and resistance at 78.96, the high of June 5.
Market sentiment found support amid sustained expectations for fresh action by the European Central Bank to shore up growth, while recent weak data out of China and Japan added to speculation that other central banks may turn to fresh easing measures as well.
Investor confidence also slightly strengthened after a report earlier showed that Germany’s economy grew unexpectedly in the second quarter, although investors remained cautious ahead of euro zone growth data, expected later in the day.
Meanwhile, the yen came under pressure after the minutes of the Bank of Japan’s latest policy meeting showed that board members weren’t ruling out any options to boost the economy, including monetary easing.
The report came a day after official data showed that Japan’s economy grew 0.3% in the three months to June, just half as much as expectations for a 0.6% expansion, from an upwardly revised 1.2% in the first quarter as export demand was hit by the euro zone debt crisis.
Also Tuesday, government data showed that tertiary industry activity in Japan rose 0.1% in June, beating expectations for a 0.3% fall and following a 0.9% increase the previous month.
The yen was also lower against the euro with EUR/JPY climbing 0.52%, to hit 97.08.
Later in the day, the U.S. was to publish official data on retail sales and producer price inflation, followed by data on business inventories.
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