* Yen falls to 7-month low versus dollar of 80.30 yen
* Technical resistance to dollar gains seen around 80.94 yen
* Euro zone services PMI disappoints, Greece concerns
By Nia Williams
LONDON, Feb 22 The yen hit a seven-month
low against the dollar on Wednesday and looked set to remain on
the defensive after recent monetary easing from the Bank of
Japan, while the euro struggled to make headway against the
greenback following Greece's bailout deal.
The single currency also came under pressure from a euro
zone services sector flash PMI survey that fell more than
expected to 49.4, below the 50 level that signifies contraction,
raising concerns the region may slide into recession later in
The dollar hit a session high of 80.30 yen, its
highest level since mid-July with traders citing buying by
Japanese importers and offshore players.
The yen has been under pressure since the BoJ's surprise
move to boost its asset buying programme last week. Some
analysts said the move could mark the end of the yen's long-term
uptrend that prompted Japanese authorities to intervene in the
currency market three times last year.
Comments from a Japanese Ministry of Finance official, that
market speculation which could contribute to the yen's rise was
persisting and Japan would respond appropriately, added to broad
The euro rose to a three-month peak against the Japanese
currency of 106.33, its highest since mid-November.
"I find it quite notable that the (Japanese) move to
increase the amount of quantitative easing has had a far more
sustained effect than the shock and awe of intervention," said
Simon Derrick, head of currency research at Bank of New York
"Technicians out there might argue we have broken the
(dollar) downtrend from summer 2007."
The dollar has risen roughly 5 percent against the yen so
far in February, putting it on track for its biggest monthly
percentage gain since March 2010. Further gains could be slow,
with exporters looking to sell into a stronger dollar.
Technical charts showed the dollar facing strong resistance
from the top of the weekly Ichimoku cloud around 80.94 yen,
after moving above the bottom of the cloud at 79.73 yen.
The dollar has not managed to stay above the weekly Ichimoku
cloud for any sustained period since mid-2007, and a breach of
that resistance could give the dollar additional momentum
against the yen.
In addition to the BOJ's monetary easing, the yen has come
under pressure this month after data showed that Japan's current
account surplus -- a major and constant support for the yen --
fell to a 15-year low last year.
"The yen is also likely facing some downward pressure in
the near-term from the rising price of Brent crude oil which is
resulting in a deterioration in Japan's terms of trade," said
strategists at Bank of Tokyo-Mitsubishi in a note.
GREECE CONCERNS PERSIST
The euro retreated from near two-week highs hit against the
dollar the previous day as optimism over the long-awaited Greek
bailout deal reached early on Tuesday gave way to concerns about
economic growth and implementation risks.
The euro was down 0.1 percent at $1.3221, from
Tuesday's high of $1.3293, its highest level since Feb. 9. It
faces resistance at $1.3306, the 100-day moving average.
"The euro had priced in a lot of the good news, in the sense
that it had priced in already some form of agreement. It's not
surprising to see it struggling to break higher," said Mitul
Kotecha, head of global foreign exchange strategy for Credit
Agricole in Hong Kong.
While Greece's aid package helped to ease fears of an
immediate default, the country's economic outlook remained
clouded and threatened to derail its efforts to meet tough
Parliaments in three countries that have been most critical
of bailouts - Germany, the Netherlands and Finland - must now
approve the package, raising concerns it will be held up.
The growth-correlated Australian dollar was last
down 0.1 percent at US$1.0652, weighed by data showing that
China's manufacturing sector contracted in February for the
fourth straight month..