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Forex - USD/JPY lower on rapid decline concerns

Posted
2/3/2013 11:43:00 PM
By: Investing.com
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Investing.com - The U.S. dollar weakened against the Japanese yen during Monday's Asian session as traders were once again seen fretting about the rapid pace of the yen's recent declines against the greenback.

In Asian trading Monday, USD/JPY fell 0.01% to 92.78 after earlier trading as low as 92.50. The pair is likely to find support at 91.59, Friday's low and resistance at 93.63. Last week. USD/JPY hit hit 92.97; the pair's highest since May 2010 before settling back to 92.78 at Friday's close.

The Japanese currency has declined for 12 straight weeks against the greenback on expectations that Prime Minister Shinzo Abe will keep pressing for bold and unlimited monetary stimulus to revive the world's third-largest economy. Abe has already been successful at getting the Bank of Japan to boost its inflation target to 2% from 1%.

Still, the yen has been the worst-performing developed world currency this year, a fact that is not lost on traders that believe the yen's pace of depreciation against the dollar cannot last forever. Some Japanese officials have also cautioned against allowing the yen to fall too far too fast against the dollar and euro.

Although the 2% inflation target has been adopted, it is widely believed that monetary easing cannot be stopped in the near-term because it will take a while for Japan, riddled with deflation for years, to reach 2% inflation.

Even with that sentiment and the fact that UDS/JPY was rebuffed in the 93 area, traders still seem to expect that it is only a matter of time before USD/JPY tests 95, a level not seen since 2010.

Meanwhile, Bank of Japan said that Japan's monetary base unexpectedly declined to 10.9% in January from 11.8% in December. Analysts expected Japan's to rise to 13.2% in January.

Elsewhere, EUR/JPY fell 0.15% to 1.2641 while AUD/JPY added 0.1% to 96.67. GBP/JPY slipped 0.08% to 145.55.


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