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Forex- Yen continues to weaken against dollar ahead of BoJ meeting

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Investing.com - The Japanese yen was again spotted lower against the U.S. dollar in Tuesday's Asian session as traders continue to digest the results of Japan's election. Traders are also eagerly awaiting the Bank of Japan meeting later this week.

In Asian trading Tuesday, USD/JPY was higher by 0.21% at 84.07. The pair traded as high as 84.08 and as low as 83.83. The pair was likely to find support at 83.61, the earlier low, and resistance at 84.34, the earlier high.

During Monday's U.S. session, the dollar jumped 0.32% to 83.80, but that was off the session high of 84.34.

The dollar and other major currencies spiked against the yen following the results of Sunday's Japanese elections, which saw Shinzo Abe reclaim the role of Japanese prime minister. Abe's Liberal Democratic Party also won a landslide majority in Japan's lower house of parliament, fanning the flames of speculation that Abe will immediately pressure the Bank of Japan to engage in monetary easing to depress the yen.

Elsewhere, EUR/JPY surged 0.25% to 110.72 while AUD/JPY continued its ascent, adding 0.22% to 88.63.

Japan's central bank is slated to meet on Wednesday and Thursday with traders widely anticipating an announcement of additional monetary easing. During his campaign, Abe called on the central bank to engage in "unlimited easing" in an effort to weaken yen and help Japan's exporters.

With Japanese interest rates at historic lows, BoJ may face a similar situation as the Federal Reserve faces. Rate-cutting is off the table, but asset-buying programs are not. The question is how will traders respond to additional more asset purchasing.

The yen was lower against the other majors as well as GBP/JPY added 0.27% to 136.32. CHF/JPY added 0.17 to 91.60 while NZD/JPY continued its impressive run, adding 0.12% to 70.98.

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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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