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Forex - Yen gains on dollar but strong downside risks remain

Published 04/11/2011, 04:07 AM
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Investing.com – The yen edged higher against the U.S. dollar on Monday, briefly touching a three-day high as Japan’s currency adjusted after last weeks losses, but speculation over the global interest rate outlook continued to weigh heavily on the prospect for future gains.

USD/JPY hit 84.62 during early European trade, the pair’s lowest since Thursday; the pair subsequently consolidated at 84.70, slipping 0.04%.

The pair was likely to find support at 84.02, the low of April 5 and resistance at 85.52, the high of April 6 and a six-month high.

The Bank of Japan is expected to maintain loose monetary policy while the earthquake ravaged economy recovers.

In contrast, the European Central Bank raised interest rates last week and is expected to tighten its policy again this year, while Federal Reserve officials have also been sounding hawkish recently.

Also Monday, Japan expanded the evacuation zone around the crippled Fukushima nuclear plant because of high levels of accumulated radiation in the area.

The yen was also higher against the euro, with EUR/JPY shedding 0.18% to hit 122.52.

Later in the day, the Federal Reserve Bank of Chicago President Charles Evans was to speak in Tokyo. Also Monday, Federal Reserve Governor Janet Yellen was to speak.

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