Forex News: Yen Falls As Powell Promises Fed Support

Yen Falls As Powell Promises Fed Support

(RTTNews) - The Japanese yen slipped against its key counterparts in the European session on Wednesday, as Fed Chair Jerome Powell's pledge to maintain easy policy and positive German data boosted risk sentiment.

Recent worries about higher interest rates and inflation eased somewhat after Powell reiterated interest rates will remain at near-zero levels and the Fed will continue its asset purchases at the current rate until "substantial further progress" has been made toward its goals of maximum employment and price stability.

The U.S. economy was "a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved," Powell said.

Powell reiterated that any rise in inflation will likely be transitory and is unlikely to have a persistent effect on the economy.

Revised data from Destatis showed that the German economy grew more than initially estimated in the fourth quarter.

Gross domestic product grew 0.3 percent sequentially in the fourth quarter instead of 0.1 percent estimated previously. However, this was much slower than the 8.5 percent rebound seen in the third quarter.

On a yearly basis, the decline in GDP slowed to 3.7 percent from 4 percent.

The yen weakened to a 6-day low of 105.87 against the greenback and more than a 2-year low of 128.75 against the euro, off its early highs of 105.17 and 127.74, respectively. The next possible support for the yen is seen around 108.00 against the greenback and 130.00 against the euro.

The yen slipped to a 1-year low of 84.19 against the loonie, more than 2-year lows of 78.16 against the kiwi and 83.82 against the aussie, after rising to 83.52, 77.07 and 83.15, respectively in prior deals. The yen is likely to find support around 86.00 against the loonie, 82.00 against the kiwi and 83.15 against the aussie.

The Japanese currency reversed from an early near 2-month high of 116.17 against the franc, falling to 116.77. On the downside, 119.5 is possibly seen as its next support level.

The yen held steady against the pound, after having dropped to near a 3-year low of 150.10 at 8:15 pm ET. At Tuesday's close, the pair was worth 148.53.

Looking ahead, U.S. new home sales for January will be published in the New York session.

At 10:00 am ET, Federal Reserve Chair Jerome Powell is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.

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