* Yen under pressure on speculation of BOJ easing
* RSI puts dollar/yen in overbought territory
* Abe "magic" may run out by U.S. Thanksgiving - analyst
* Euro supported by cautious optimism on Greece
By Hideyuki Sano
TOKYO, Nov 21 The yen slumped to 7-1/2-month
lows against the dollar on Wednesday and fell nearly as far
against the euro on views Japan's central bank will be pushed
into implementing more radical monetary expansion policies.
The euro held near two-week highs against the dollar, helped
by hopes that euro zone finance ministers will agree to unblock
aid to Greece after their ongoing discussions on ways to reduce
the country's debt to sustainable levels.
The dollar rose to as high as 81.955 yen, a level not
seen since early April, with its advance blocked by selling
related to hedging for an options barrier at 82 yen, though a
break there should trigger more short-covering.
It last stood at 81.90 yen, a gain of 0.2 percent from late
The yen was also undermined by data showing Japan's exports
fell more than expected in October, cementing worries the
country is in for a recession in the current quarter.
"The data was not just worse than expected but also
underscored the poor state of the economy. The yen's downtrend
seems pretty solid now," said Katsunori Kitakura, associate
general manager of market making at Sumitomo Trust Bank.
The yen hit its lowest level since April/May against many
currencies. The euro also hit a 6-1/2-month high of 104.99 yen
and last stood at 104.92 yen, up 0.2 percent on the
The yen has been falling sharply after Prime Minister
Yoshihko Noda called an election on Dec. 16 and the main
opposition leader, a front-runner to become the next premier, is
pushing the Bank of Japan for more aggressive monetary stimulus.
Shinzo Abe, the leader of the Liberal Democratic Party, has
put monetary policy at the centre of debate ahead of the
election, calling for "unlimited easing", pushing rates below
zero, directly underwriting bonds issued to fund public
works, and setting an inflation target as high as 3 percent.
While sentiment over the yen is weak, oscillators such as
the relative strength index are showing signs the yen may be
oversold in the short-term and some analysts say the latest bout
of yen weakness may be coming to an end soon.
"Abe now has few other things left to say about monetary
policy. It's about the time the power of his magic runs out,"
said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking
Corp, adding that the yen's slide will likely have run its
course by the U.S. Thanksgiving holiday on Thursday.
The euro stood at $1.2810, near a two-week high of
$1.28295 set on Tuesday as the market looked to the ongoing
meeting of euro zone finance ministers with hope of progress on
a deal to support Greece.
Still, the common currency is expected to stay under
pressure from the spectre of recession in the euro zone and
uncertainty over Spain, which has not yet requested financial
aid and faces a secessionist threat in a regional election on
Sunday in Catalonia.
On the other hand, concerns that the U.S. economy faces a
risk of recession if lawmakers fail to agree on measures to
defer a fiscal crunch due to kick in early next year have
supported the dollar, the vast liquidity of which makes it an
investors' safe haven at times of crisis.
U.S. Federal Reserve Chairman Ben Bernanke said on Tuesday
the Fed does not have the tools to offset the impact of a worst
case "fiscal cliff" scenario.
He maintained his guidance that U.S. monetary policy would
stay loose with interest rates near zero until at least
But he offered few clues, however, on how the Fed might
tweak its bond-purchase programme at the start of next year in
its effort to spur more borrowing at low interest rates.