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Forex - USD/JPY nears record low amid speculation over BoJ move

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Forexpros - The U.S. dollar pared gains against the yen on Tuesday, to trade within striking distance of the pair's all-time low, prompting warnings from Japanese officials about possible intervention to curb the yen's gains.

USD/JPY pulled away from 77.82, the daily high, to hit 77.22 during late Asian trade, up just 0.02% over the day.

The pair was likely to find support at 76.12, the low of March 16 and the pair's record low and resistance at 78.16, the high of July 27.

Demand for the safe haven yen remained supported amid concerns over the outlook for global economic growth after data on Monday showed that the U.S. Institute for Supply Management's Manufacturing Index fell to its lowest level in two years in July.

Investors also remained wary amid concerns that a deal to raise the U.S. debt ceiling would not be sufficient to prevent ratings agencies from downgrading the U.S. sovereign debt rating.

On Monday, the House of Representatives approved legislation to raise the U.S. debt limit by at least USD2.1 trillion and cut federal spending by as much as USD2.4 trillion. The measure was to go to the Senate for a final vote later in the day.

Japanese Finance Minister Yoshihiko Noda said he would "like to watch market movements closely today, particularly after the progress in the U.S. debt issue," and added that the government was talking with the Bank of Japan and other countries about yen strength.

The yen was also higher against the euro, with EUR/JPY shedding 0.50% to hit 109.48.

Japan last intervened in foreign exchange markets on March 18, in conjunction with G7 counterparts after the yen jumped to a record against the dollar following the March 11 earthquake and tsunami.

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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.

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