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ForexPros Daily News October 5, 2010

Forex - USD/JPY erases gains amid Fed stimulus concerns

Forex Pros – The U.S. dollar erased gains against the yen on Tuesday, retreating from a 4-day high, amid concerns that the Federal Reserve may implement further quantitative easing in the coming months.

USD/JPY retreated from 83.97, the pair’s highest since September 29, to hit 83.33 during European morning trade, shedding 0.02%.

The pair was likely to find support at 82.92, the low of September 15 and a 15-year low and resistance at 84.33, the high of September 28.

Earlier in the day, the Bank of Japan announced that it had lowered its benchmark interest rate to a range of between 0.0% to 0.1%, the lowest level since 2006.

The bank said that, “although Japan's economy still shows signs of a moderate recovery, the pace of recovery is slowing down partly due to the slowdown in overseas economies and the effects of the yen's appreciation on business sentiment”.

Meanwhile, the yen was down against the euro, with EUR/JPY gaining 0.64% to hit 114.82.

Late Monday, while addressing a forum in Rhode Island, Federal Reserve Chairman Ben Bernanke said that that the central bank’s first round of large-scale asset purchases improved the economy and that further buying will probably help more.

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