Investing.com - The U.S. dollar edged lower against the yen on Wednesday, as safe haven demand was boosted by sustained concerns over Spain’s ailing banking sector while comments by the Bank of Japan lent support to the yen.
USD/JPY hit 79.40 during early European trade, the daily low; the pair subsequently consolidated at 79.36, falling 0.18%.
The pair was likely to find support at 79.12, the low of May 17 and a three-month low and resistance at 79.70, the high of May 28.
Market sentiment weakened as the yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold, after a Spanish official said the government is preparing to recapitalize Bankia, one of the country’s largest commercial lenders.
Adding to concerns, Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early, handing to his successor the task of convincing investors that Spanish banks will not need an international bailout.
Meanwhile, BoJ policymakers signaled that Japan will likely achieve the 1% inflation target without further monetary easing, saying the bank’s February and April stimulus measures have heightened chances of economic recovery.
The central bank did not rule out further easing if necessary however, if financial troubles in the euro zone were to exert strong downward pressure on Japan’s economy.
Elsewhere, the yen was higher against the euro with EUR/JPY retreating 0.54%, to hit 98.85.
Later in the day, the U.S. was to release industry data on pending home sales.
USD/JPY hit 79.40 during early European trade, the daily low; the pair subsequently consolidated at 79.36, falling 0.18%.
The pair was likely to find support at 79.12, the low of May 17 and a three-month low and resistance at 79.70, the high of May 28.
Market sentiment weakened as the yield on Spanish 10-year bonds climbed to their highest level so far this year on Tuesday, approaching the critical 7% threshold, after a Spanish official said the government is preparing to recapitalize Bankia, one of the country’s largest commercial lenders.
Adding to concerns, Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early, handing to his successor the task of convincing investors that Spanish banks will not need an international bailout.
Meanwhile, BoJ policymakers signaled that Japan will likely achieve the 1% inflation target without further monetary easing, saying the bank’s February and April stimulus measures have heightened chances of economic recovery.
The central bank did not rule out further easing if necessary however, if financial troubles in the euro zone were to exert strong downward pressure on Japan’s economy.
Elsewhere, the yen was higher against the euro with EUR/JPY retreating 0.54%, to hit 98.85.
Later in the day, the U.S. was to release industry data on pending home sales.