Forexpros - The U.S. dollar fell against the yen on Thursday, as market sentiment slightly weakened ahead of the European Central Bank’s policy-setting meeting and the release of key U.S. economic data later in the day.
USD/JPY hit 79.60 during early European trade, the daily low; the pair subsequently consolidated at 79.65, falling 0.29%.
The pair was likely to find support at 79.12, the low of June 29 and resistance at 80.13, the high of May 22.
The ECB was widely expected to announce an interest rate cut to 0.75% from the current record low 1.00% to help bolster growth in the region, following a recent string of weak economic data.
The ECB rate announcement was to be followed by a press conference with central bank head Mario Draghi to outline the reasons for the monetary policy decision and discuss the economic outlook for the euro area.
On Wednesday, the final reading of the euro zone services purchasing managers’ index came in at 47.1 in June, below the 50 level which separates contraction from growth for the fifth consecutive month.
Meanwhile, markets were also eyeing Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.
In addition, investors were awaiting the Bank of Japan’s policy-setting meeting, scheduled the following week, amid growing expectations for fresh monetary easing to counter the effects of the strong yen.
Elsewhere, the yen was higher against the euro with EUR/JPY retreating 0.28%, to hit 99.79.
Later in the day, the U.S. was to publish a report by payroll processing firm ADP on non-farm employment change, followed by government data on unemployment claims. The Institute of Supply Management was also to release a report on U.S. service sector activity.
