The yen slipped on Wednesday as a bout of global risk reduction abated, with some market players looking for fresh opportunities to put on bets against the yen after having booked profits the previous day. The yen fell against the dollar and dipped broadly on the crosses, giving back some of the gains it made on Tuesday, when it rallied broadly as short-covering gained steam.
Indeed, the yen has quickly come back under pressure, with the Australian dollar rising 1.2 percent to 88.26 yen. The Aussie dollar regained some ground against the yen after Tuesday's 1.8 percent slide, but still remained well below a 2-1/2 year high just above 90 yen touched on Monday.
The yen has slid broadly over the past several weeks on worries about the economic impact of a massive earthquake and tsunami that hit north-east Japan on March 11, and on strengthening market expectations that the Bank of Japan will lag behind other central banks in raising interest rates. The dollar rose 0.7 percent to 84.22 yen after having slid more than 1.2 percent on Tuesday for its biggest one-day percentage drop in four months.
The dollar bounced off support at its 200-day moving average near 83.50 yen. More support lies at 83.34 yen, the 23.6 percent retracement of the dollar's mid-March to April rally, and 83.30 yen, the dollar's March 11 intraday high. Short-term resistance lies at 84.33 yen, the conversion line on the daily Ichimoku chart, a form of Japanese technical analysis widely used among market players. The euro last stood at 122.00 yen, up 0.8 percent from late US trade on Tuesday but well below an 11-month high of 123.33 yen hit on Monday.
The euro rose 0.l percent against the dollar to $1.4486, having touched a 15-month high of $1.4520 on Tuesday on trading platform EBS. The euro got a lift against the dollar on Tuesday after Chinese Premier Wen Jiabao said China will carry on buying Spanish sovereign bonds.