The pair is is testing multi-year highs amid speculation that the Japanese government would tolerate much sharper depreciation in the yen. Press reports said that Deputy Economy Minister Yasutoshi Nishimura said the yen’s decline isn’t over and a level of Y100 versus U.S. dollar wouldn’t be a concern. As a result, the yen fell to as low as Y90.56, the weakest level since June, 2010, while dropping to Y121.07 against the euro, the weakest since April, 2011. Meantime, German Chancellor Angela Merkel expressed concern about the risks of currency manipulation by Japan, but failed to halt the slide in the yen. She reportedly said that “I am not completely without worry. We have a much higher sensitivity through the discussion in the G20 for currency manipulation or political influence.” Meantime, the release yesterday of trade statistics which showed that Japan posted largest-ever deficit in calendar 2012, combined the release today of consumer price data, which is expected show that Japan saw accelerated deflation in December would also offer a key support for the dollar-yen in the case of a sudden downturn.
EasyForexNews Research Team