The dollar came under pressure again on Friday, losing some ground made from a bout of profit-taking on other currencies ahead of US jobs data and Group of Seven (G7) and IMF meetings later in the week. The Japanese yen held near its 15-year peak against the dollar as traders are starting to feel that Japan may not intervene for now - at least not as aggressively as it did last month - to keep the yen's gains in check.
"There's speculation that, if the G7 wants a co-ordinated stance to put pressure on China to raise the yuan, then it becomes more difficult for Japan to intervene," said a dealer at a Japanese brokerage house. Many market players think expectations of quantitative easing by the Fed will keep pushing the dollar lower, even though some traders were turning cautious, on the chance that surprise strength in US payroll data could set that scenario back.
Markets are also wary that the G7 and IMF meetings starting on Friday may produce a surprise in the way of a coordinated front on currencies, as calls have mounted for global efforts to avoid competitive currency devaluations. This wariness helped to knock the euro off an eight-month high of $1.4030 hit on the EBS platform on Thursday, though the euro resumed its uptick in Asian trade to mark $1.3945, up 0.1 percent on the day.
The dollar index against a basket of six currencies slipped 0.1 percent to 77.35, edging towards an 8-1/2 month low of 76.906 hit on Thursday. It has support at 76.60, which is a low back in mid-January and the index low for 2010. Initial resistance is expected at 77.70, the top of Thursday's price action, and then 78.05-10, which was support at the start of October and in January.
Against the yen, the dollar traded at 82.36 yen, less than 30 pips from a 15-year low of 82.11 yen hit on Thursday and edging ever closer to its 1995 record low of 79.75 yen. On the charts, the initial downside target is 81.30 yen, with resistance expected at the former supports of 82.87 and Y83.15.
Option barriers are lined up at 82 yen and below, which traders may try to trigger, although some said the dollar was more likely to stay above Thursday's low before the US payroll data. Japanese Prime Minister Naoto Kan said Japan will take decisive steps on forex if needed but added it also wants to cooperate with the G7 and other countries. The Australian dollar was steady at $0.9820, after hitting $0.9918 on Thursday, its highest in 28 years.