Investing.com - The yen was found flirting with two-and-a-half-year lows against the dollar in Thursday's Asian session after Japanese Prime Minister Shinzo Abe again called for the Bank of Japan to align its inflation target with his own.
In Asian trading Thursday, USD/JPY rose 0.27% to 88.13. The pair is likely to find support at 88.01 and encounter resistance at 88.16.
During Wednesday's session, Abe again told the Bank of Japan to raise its inflation target to 2%. Abe's stern tone with BoJ dates back to mid-November when it became clear he would run for Prime Minister again. Since his victory, Abe has implored the central bank to take an aggressive approach to monetary easing, which has pressured the yen to the benefit of Japanese exporters.
Abe has threatened to revoke a law guaranteeing BoJ's independence if the central bank does not buy into his easing and inflation demands. BoJ's current inflation target is 1% for Japan, which has long suffered from deflation.
Traders are widely expecting that the central bank will fall in line with Abe and adopt a 2% inflation target when it concludes a two-day meeting on January 22.
That could keep the yen under pressure against the dollar and other major currencies, but with USD/JPY sitting on a double-digit gain since mid-November, some traders are saying the pair is due for a correction.
Meanwhile, riskier currencies gained steam against the yen Thursday following another positive Chinese data point. In a report, National Bureau of Statistics of China said that Chinese Trade Balance rose to 31.60B, from 19.60B in the preceding month. Analysts had expected Chinese Trade Balance to rise to 19.70B last month.
EUR/JPY added 0.12% to 114.97. The pair could test support at 113.45, the low from Dec. 31, and resistance at 115.56, the high from Jan. 6. Elsewhere, GBP/JPY rose 0.19% to 141.10.
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