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Forex - Euro nears 1-month high against broadly weaker yen

Published 05/31/2011, 05:22 AM
Updated 05/31/2011, 05:22 AM

Investing.com – The euro rallied to an almost one-month high against the broadly weaker yen on Tuesday, as concerns over a Greek sovereign debt default eased and after ratings agency Moody’s placed Japan’s sovereign debt rating under review, pending a possible downgrade.

EUR/JPY hit 117.80 during European morning trade, the pair’s highest since May 5; the pair subsequently consolidated at 117.54, jumping 1.69%.

The pair was likely to find support at 114.67, last Friday’s low and resistance at 119.77, the high of May 5.

Earlier in the day, the Wall Street Journal reported that Germany was considering dropping its push for a rescheduling of Greek bonds to facilitate a new package of aid loans to the country.

The European Union is drafting a second bailout package for Greece to release vital loans next month and avert the risk of it defaulting after the International Monetary Fund said it would withhold the next tranche of aid to Greece in June unless the EU guaranteed to meet Athens' funding needs for next year.

Meanwhile, Moody's said it was placing Japan's Aa2 sovereign debt rating under review, as the government continues to struggle in the face of political deadlock over fiscal consolidation and how to finance reconstruction efforts from the March 11 disaster.

The announcement came less than a week after ratings agency Fitch cut its outlook on Japan's debt.

The euro was also sharply higher against the Swiss franc, with EUR/CHF rallying 0.85% to hit 1.2275.

Also Tuesday, official data showed that Japan’s industrial production rose less-than-expected in April, while a separate report showed that the jobless rate rose to 4.7% from 4.6% in March as payrolls fell.

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