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Forex - USD/JPY drops as market views yen as oversold on stimulus

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Investing.com - The dollar fell against the yen on Tuesday after investors viewed the Japanese currency as oversold in wake of the launch of a massive stimulus program, which sparked a round of bottom fishing.

The dollar shot up to highs not seen since 2009 against the yen on Monday after Japan launched fresh monetary easing measures designed to stimulate the broader economy.

In U.S. trading on Tuesday, USD/JPY was trading at 99.09, down 0.28%, up from a session low of 98.59 and off a high of 99.66.

The pair was likely to find resistance at 99.66, the earlier high, and support at 98.31, Monday's low.

The yen plunged against the greenback and most other currencies after the Bank of Japan conducted its first government bond purchasing operation early Monday when it kicked off purchases of JPY1.2 trillion in Japanese government debt maturing in five years or more.

The move forms part of the Bank of Japan's plan to double its asset purchase program over the next two years and extend the maturities of the bonds it purchases as part of a strategy to hit a 2% inflation target.

By Tuesday, however, investors felt the yen had fallen too fast and too far and took up positions that ended the currency's slide against the dollar.

The yen, meanwhile was down against the pound and down against the euro, with GBP/JPY up 0.19% and trading at 151.86 and EUR/JPY trading up 0.34% at 129.69.

On Wednesday in the euro zone, France is to publish official data on industrial production.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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