The Japanese Yen was under pressure during the Asian trading session on growing speculation that the central bank might today loosen monetary policy following last week’s move by the U.S. Federal Reserve Bank which weakened the greenback and subsequently strengthened nearly every other currency. The U.S. Dollar Index, as a measure of the greenback’s strength relative to a basket of major currencies, continues to hold close to a 7-month trough at 78.95 .DXY.
As reported at 1:18 p.m. (JST) in Tokyo, the U.S. Dollar was trading at 78.57 Japanese Yen, falling from a high of 78.93 Japanese Yen struck on Monday and well above the 7-month trough of 77.13 Japanese Yen struck last Thursday. The U.S. Dollar is finding some support from a rise in U.S. Treasury bonds. The Bank of Japan begins a 2-day policy meeting today and is generally very vocal about its intent.
The EUR/USD was trading at $1.3103, slipping from a 4½ month peak of $1.3173 struck on Monday. Since July and the 2-year low of $1.2040, the common currency has rallied nearly 9% as investors confidence in a resolution pushes the Euro higher against the weakened U.S. Dollar. Analysts don’t see the Euro pushing too much higher in the short term saying that some new impetus is needed to keep the momentum going.