The dollar was lower against the yen in midafternoon trade, hit by technically-driven profit-taking, dealers said. Investors also refrained from taking fresh positions amid the ongoing talks here between US Treasury Undersecretary John Taylor and Haruhiko Kuroda, Japanese vice finance minister for international affairs, they said.
Takashi Nakada, foreign exchange manager at BNP Paribas, said the dollar may turn hostage to the downside risk this week mainly because of technical reasons. "After the market confirmed a relatively strong top-side resistance for the dollar above the 125 yen level, the unit may need to undergo a mild correction this week," he said.
"Besides, few think the dollar, despite the stablised movement on Wall Street, will immediately rally towards the 130 yen level." Earlier in the day, the dollar was also pressured briefly by Moody's announcement that it raised its foreign currency country ceilings for bonds and bank deposits for Japan to 'Aaa' from 'Aa1', dealers said.
"The reaction was short-lived, however," Nakada said. The increased wait-and-see mood limited the movement in the foreign exchange market ahead of the expected release of anti-deflation package later in this week, dealers said.
"But unless such a package contains surprises, the announcement is not likely to have any lasting impact," Nakada said.//www.ananova.com