* Dollar/yen threatens to fall below 200-day average
* Yen helped by dwindling chance of near-term BOJ easing
* Dollar hampered by fall in U.S. bond yields, dovish Fed
* ECB easing expectations, election jitters hurt euro
By Hideyuki Sano
TOKYO, May 20 The yen held near a 3 1/2-month
high against the dollar and the euro on Tuesday, supported by
diminishing expectations of stimulus by the Bank of Japan as
well as falling U.S. and European bond yields.
The dollar traded at 101.48 yen, a day after falling
to 101.10 yen, its lowest level since early February -- briefly
breaking below its 200-day moving average at 101.25 yen.
The chart break was a talking point among yen traders given
the dollar had not stayed below that average except for brief
forays in October-November last year. The dollar has largely
been in a strong position since late 2012 when Japanese Prime
Minister Shinzo Abe's embarked on aggressive fiscal and monetary
easing to revive growth.
As a result a sustained fall below that mark may portend a
turning point in the yen's weakening trend.
The uptick in the yen also comes at a time of decreasing
expectations of near-term monetary easing by the Bank of Japan
as Governor Haruhiko Kuroda has stuck to an upbeat assessment on
the Japanese economy in recent weeks.
The BOJ is widely expected to keep it policy unchanged at a
two-day policy meeting starting on Tuesday, with traders now
looking to Kuroda's press conference after the meeting.
"If Kuroda makes dovish comments tomorrow, then the
dollar/yen may manage to stay above the 200-day average. But if
he intentionally stresses his optimistic economic views, markets
will take it as a sign he accepts a higher yen and fall in
stocks," said Osamu Takashima, head of FX strategy at Citigroup
Securities in Tokyo.
The dollar has been facing some pressure of its own from
falls in U.S. Treasury yields.
Mixed economic data and a generally dovish outlook from the
Federal Reserve have weighed on U.S. bond yields, keeping dollar
bulls in check.
On Monday, Dallas Fed President Richard Fisher and San
Francisco Fed President John Williams added to the dovish tone.
Fisher, known for his hawkish views on monetary policy, said
there have been positive aspects to the Fed's easy policy, while
Williams, a dove, acknowledged weakness in the U.S. housing
Williams added that it's not appropriate for the Fed to
start raising interest rates until the second half of next year.
The benchmark U.S. 10-year yield, which hit a six-month low
of 2.473 percent last week, has stood near that
level since then.
The euro also fell to 3 1/2-month low of 138.62 yen on
Monday and last fetched 139.16 yen.
Against the dollar, the common currency was steadier at
$1.3712, little changed over the past few days, though it
was not far from 2 1/2-month lows of $1.3648 hit last Thursday.
The euro has been pressured by soft euro zone growth data
published on Thursday and expectations that the European Central
Bank will adopt stimulus early next month.
The euro could come under more pressure ahead of potentially
destabilising European Parliament elections later this week,
where votes for anti-austerity, euro-sceptic parties look set to
Yields on Italy and Spanish government bonds rose on Monday,
as investors took profits on recent price gains as investors
were concerned a rise of euro-sceptic forces could thwart reform