Investing.com - The U.S. dollar rose to fresh seven-year highs against the yen, even after the release of disappointing private sector employment data from the U.S., as the diverging policy outlook between the Federal Reserve and the Bank of Japan continued to weigh on the yen.
USD/JPY hit 119.48 during early U.S. trade, the pair\'s highest since August 2007; the pair subsequently consolidated at 119.42, edging up 0.14%.
The pair was likely to find support at 118.20, Tuesday\'s low and resistance at 119.85.
Payroll processor ADP reported on Wednesday that the U.S. private sector created 208,000 jobs in November, falling short of expectations for jobs growth of 223,000 and down from 233,000 in October.
Meanwhile, the yen remained under pressure after the BoJ unexpectedly expanded its stimulus program in late October. In contrast, the Fed wound up its asset purchase program in October and is weighing whether or not the economy is strong enough to start raising interest rates next year.
On Monday, ratings agency Moody’s downgraded Japan\'s sovereign debt rating by one notch to A1.
The ratings agency cited uncertainty over Japan’s ability to cut its fiscal deficit following a decision by Prime Minister Shinzo Abe to delay a planned sales tax increase.
Prime Minister Abe dissolved parliament earlier this month, clearing the way for elections to be held on December 15 to seek a fresh mandate for his economic policies, which call for a weaker yen. The decision came after data showing that Japan’s economy unexpectedly fell into recession in the third quarter.
The yen was higher against the euro, with EUR/JPY declining 0.38% to 147.09.
Also Wednesday, data showed that the euro zone composite purchasing managers’ index, which covers the manufacturing and service sectors across the currency bloc, fell to 51.1 last month from 52.1 in October.
The weak data added to pressure on the European Central Bank to step up measures to spur growth and combat persistently low levels of inflation in the region ahead of its monetary policy meeting on Thursday.
Later in the day, the Institute of Supply Management was to publish a report on U.S. service sector activity.