The yen wasn't able to sustain profits towards 109.0 from the US currency and the dollar strengthened back to 110.35 at New York on Monday. The dollar pushed to 110.5 from the yen in Asian trading on Tuesday, but struck selling pressure over the 110.70 level. There's very likely to be additional strong short-term buck service round the 109.0 degree, particularly with strong importer dollar requirement at those amounts. The dollar will find it hard to secure gains.
Underlying optimism is very likely to continue in the brief term and policy will be a significant background attention. Deputy Bank of Japan Governor Iwata said he was convinced that states for a reduction of monetary policy might be in place. Yield factors will remain favourable for Japan unless there's a downgrading of US interest rate expectations and this can restrict the area of dollar selling when the dollar finds it hard to secure additional buying interest.
There'll be pressure for yuan appreciation with trade info that is strong and these pressures will keep some pressure on the yen. As the dollar may weaken sharply, the US tare information will have to be watched on Tuesday.
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