Investing.com - The U.S. dollar backed off its recent gains
against the Japanese yen during Tuesday's Asian session as traders
speculated the yen had fallen too far too fast against the
greenback and other major currencies.
In Asian trading Tuesday, USD/JPY was lower by 0.15% at 87.66. The
pair was likely to find support at 86.76, the low of January 3 and
resistance at 88.40, Friday's high and a two-and-a-half year high.
USD/JPY was trading in the 82.50 around the time Shinzo Abe and his
Liberal Democratic Party swept to easy victory in Japan's most
recent elections. Much to the excitement of Japanese exporters,
Abe, Japan's new prime minister, has shown his tough talk about
weakening the yen and engineering a higher rate of inflation was
more than just empty campaign rhetoric.
However, some Japanese business leaders have begun cautioning
against letting the yen get too weak against the other major
currencies. Those business leaders are concerning excessive
depreciation or yen weakness that was brought about for what they
deem to be the wrong reasons.
USD/JPY has jumped about 11% since mid-November when Abe began
campaigning for another term as prime minister. Abe has been vocal
about his desire for the Bank of Japan to engage in unlimited
monetary easing and for the central bank to set its inflation goal
at 2%, which would match his own.
BoJ kicks off a two-day meeting on January 21 and traders are
widely expecting the central bank to raise its inflation target to
2%. In the spot market, the yen has been the worst-performing major
currency over the past month.
Elsewhere, EUR/JPY slipped 0.2% to 114.93. The pair sought to test
support at 114.11, the earlier low, and resistance at 115.56, the
earlier high. AUD/JPY was off 0.47% at 91.79.
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