24 May 2001, 10:45 Forex: Yen off highs in midafternoon Tokyo on BoJ rate check rumours
TOKYO (AFX-ASIA) - The yen was pushed off its highs in midafternoon
trading, hit by rumours of rate-checking by the Bank of Japan, dealers
said.
Earlier, the yen rallied to as high as 118.80 yen on substantial
stop-loss dollar sell orders, which was activated after the Japanese
unit broke through major resistances at 120.50 yen and 120.00 yen, they
said.
"The breach of these major technical lines, which was considered to
be unlikely, exploded latent energy to test the upside of the yen,"
BankOne NA foreign exchange vice president Masahiro Ishikawa said.
The momentum of the yen was curtailed in mid-afternoon trade by
speculation about the BoJ action, but Ishikawa said he did not believe
the central bank took any action today.
"Today's development had nothing to do with fundamentals, but was
driven by technical play," he said, adding that "the euro was the
ground zero."
BankOne's Ishikawa said that although there is no fundamental
reason to buy the yen any further, the Japanese currency will be
exposed to additional upside risk due to technical reasons.
"People may not begin to trade the dollar/yen based fundamentals
.... until they test the 117-118 yen level," he said.
Dealers said the yen may also resume its appreciation also against
the euro, depending on developments in the dollar/yen straight trading.
"If the yen were to gain additional one or two yen (against the
dollar), we can not dismiss the possibility of the unit rallying to the
double digit zone," Ishikawa said, suggesting that the euro may fall to
below the 100 yen level.
The euro was also pushed off its intra-session low of 0.5490 usd
due to the yen's downturn against the dollar, dealers said.
But the European currency is expected to remain in the falling
trend, rather than entering a recovery phase, dealers said.
"The market will just be waiting to see if the ECB will carry out
intervention anywhere between the 0.84 and 0.85 usd levels," Ishikawa
said.
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