The dollar dipped on Monday and looked poised to test a 15-year low against the yen after failing to retain gains made after US jobs data, although caution about Japanese intervention deterred further yen buying. Less-dire-than-expected US payrolls data last week eased market anxiety over chances of a global slowdown and boosted demand for the euro and growth-leveraged currencies.
Dollar/yen inched down 0.1 percent to 84.35 yen, not far from a 15-year low of 83.58 marked late last month. It rose briefly to 85.23 after the payroll data, but quickly erased the gains. US non-farm payrolls fell 54,000, a much smaller drop than the predicted 100,000. Private employment, considered a better gauge of labour market health, increased 67,000.
In currency markets, rising risk appetite has tended to help the euro and higher-yielding currencies in recent months, as investors increasingly see the greenback as a funding currency for investments on expectations of a prolonged period of near zero rates in the US The euro was little changed at $1.2893, having risen to $1.2905 earlier in the day, its highest in nearly three weeks.
Resistance is seen around $1.2920-35, a level where the currency was capped in mid-August. The Australian dollar fetched $0.9168, down about 0.1 percent from late US levels last week but still near a four-week high of $0.9176 hit after the US payrolls figures.
The Aussie faces resistance around $0.9180, its trendline from highs in April and August, and the $0.9220-25 area, its peak in early August. The dollar index, a gauge of the greenback's performance against a basket of six major currencies, fell 0.1 percent on the day to 81.999.
Support is seen at 81.91, a low marked on August 18 and after that 81.82 - the 50 percent Fibonacci retracement of the index's rise from 80.085 to a high of 83.559, both also marked in August. The yen has been bought in the past few months as investors tend to favour currencies from countries with a current account surplus when they want to avoid risky assets.
Japan's positive balance of payments figures mean dollar selling by Japanese exporters constantly outweighs dollar buying by Japanese importers, capping the greenback versus the yen. Dollar/yen has had a very high correlation with US yield levels in recent months. The lower US yields are, the cheaper the dollar is against the yen, as lower yields tend to discourage investment in the dollar from Japan.