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