The JPY continued with its recent run of volatility in the Asian session Wednesday, gaining against the euro and the dollar, as market players attempted to reverse some of the overnight moves. Dollar-yen today slipped below last night’s U.S. low of Y88.35, to trade a morning low of Y88.15, compared with the early Asian high of Y88.85. The move was seen as euro-yen also ran into a wave of selling interest after it traded an early high of Y118.24. The cross eventually deflated to Y117.28 before some bottom-picking in euro-dollar managed to contain the downside. Dollar-yen also continued to languish near session lows into the late morning here, and was last at Y88.24 compared with a U.S. close of Y88.80. “There may now be some more two way risk in the dollar-yen in the short term,” commented RBS analysts. “Expectations for the BOJ to deliver a new more direct higher inflation target next week have been raised and take yet further measures to expand its APP (asset purchase program).” A break below last Thursday’s lows near Y87.84 would likely spark a new wave of selling, but dollar-yen is unlikely to fall too far, traders said. “Just as the market often reacted to the Fed’s additional policy easing steps gradually and persistently since 2009 to 2012, the market will continue to react to the policy steps in Japan even after they are delivered.” In other pairs, euro-dollar was at $1.3289 in the late morning here, following a $1.3280 to $1.3314 Asian morning range, and down from around $1.3305 overnight. “The pair is seen trading around the $1.3300-levels and we expect range-bound price action to persist around these levels,” commented analysts. The single currency fell to a $1.3263 low in U.S. trade last night after comments from Eurogroup head Jean-Claude Juncker that the euro rate is “dangerously high.”
EasyForexNews Research Team