Investing.com - The U.S. dollar was higher against the yen in holiday-thinned trade on Monday, as concerns over U.S. budget negotiations boosted safe haven demand, while expectations for fresh easing measures in Japan continued to weigh on the yen.
USD/JPY hit 86.17 during early European trade, the daily high; the pair subsequently consolidated at 86.11, rising 0.26%.
The pair was likely to find support at 85.59, the low of December 27 and resistance at 86.55, the high of December 28.
Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1 unless Democrats and Republicans agree how to cut the deficit.
U.S. President Barack Obama met with congressional leaders at the White House Friday afternoon, but both sides failed to reach an agreement ahead of the looming year-end deadline.
Senate Majority Leader Harry Reid said the Senate would resume sitting on Monday to continue discussions, but there were still significant differences between the two sides.
The yen has come under heavy selling pressure in recent weeks on expectations that newly elected Japanese Prime Minister Shinzo Abe will push for more monetary easing by the Bank of Japan.
Abe has recently called for unlimited easing in order to weaken the local currency and spur growth in the recession-hit economy.
The yen was steady against the euro with EUR/JPY dipping 0.03%, to hit 113.52.
Trading volumes were expected to remain thin as many investors already closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
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