Both still short of high established on Jan 2
San Francisco, CA -- (SBWIRE) -- 01/15/2013 -- The dollar was able to edge up against the Yen after the retreat from a week ago and from a two-and-a-half year high, which lured buyers who were waiting for an opportunity to buy on dips. Now the outlook for more Japanese monetary easing is expected to weigh into the yen even further.
The dollar rose 0.3% at 87.38 after having slipped to the intraday low that neared 86.83, which was the lowest in a week's time, and a loss of 1.9% from last Friday when the dollar peaked at 88.48 yen.
"In terms of the drop that we saw in dollar/yen, there were a lot of dollar buyers coming in," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
"So there do seem to be some dollar buyers out there who were looking for the dip in dollar/yen to pick it up," he said.
Traders cited the demand for dollars, which is most often a sign of dollar buying by the average Japanese importer.
Regardless, the overall risk of the near-term pullback in regards to the dollar won't be ruled out just yet, according to Kotecha of Credit Agricole. The dollar's possible support is found at 86.54 yen, which was its intraday low on the January 2. That marker could open way for a drop to 85.9 yen, he noted.
Meanwhile, the euro rose 0.3% to 114.19 yen, and still had some distance to go to make it back to a 18-month high of 115.995 yen set on January 2.
The peak of the yen was on Friday, as the dollar had gained nearly 12% from early November, and traders rallied.
"Late last year, the yen sharply weakened in thin conditions. If you had to take a market position, could you see any reason to buy yen? No. So the yen was sold," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.
"But markets can't keep moving for weeks on the same factors, even when the overall trend remains the same, so in the short term, the yen started moving up again."
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