TOKYO (AFX-ASIA) - The yen recovered some of this morning's sharp losses against the dollar during the midafternoon after one U.S. fund manager was seen aggressively taking profit in the U.S. unit, dealers said.
They said the dollar had seen sharp gains against the yen, spurred by earlier interest from another U.S. investor, with the unit heading towards the 120 yen level but failing to immediately breach key resistance at this point.
"The market remained choppy in extremely thin trading," said a Sumitomo Trust and Banking forex dealer.
"U.S. Treasury Secretary nominee Paul O'Neill's comments yesterday that confounded earlier speculation he might not support a long-standing strong dollar policy helped change the direction of dollar-yen trading here," he said.
"The psychologically important 120 yen level likely will be breached but it is uncertain when," the dealer said, adding that most market players remained on the sidelines.
"The U.S. market is expected to remain volatile as an array of corporate earnings announcements will come out soon and this will cause profit-taking" on the dollar's gains.
The euro continued its upward momentum seen this morning, although it is not expected to break out of its current range.
The Sumitomo Trust dealer said the dollar is set to hold steady against the euro as the markets remain cautious over the attitude of senior government officials to major shifts in currency values.