Forex - USD/JPY hits 3-day low amid euro zone debt worries

Forex Pros – The U.S. dollar slid to a three-day low against the yen on Monday, as ongoing concerns over sovereign debt issues in the euro zone fuelled risk aversion and boosted demand for traditional safe haven assets.

USD/JPY hit 81.36 during late Asian trade, the pair’s lowest since May 18; the pair subsequently consolidated at 81.41, shedding 0.35%.

The pair was likely to find support at 80.72, the low of May 17 and resistance at 82.23, the high of May 19 and a three-week high.

Market sentiment was hit after Fitch Ratings cut Greece's debt ratings by three notches on Friday, saying even a “soft” restructuring of the country’s debt by European Union policy makers would be considered a default, while rival Standard & Poor's cut its outlook for Italy to negative from stable on Saturday.

The results of Sunday’s elections in Spain also weighed on sentiment, as the ruling Socialists lost to conservatives in local and regional elections, raising concerns about how the country will address its debt problems.

The yen was also higher against the euro, with EUR/JPY dropping 1.24% to hit 114.21.

Earlier Monday, data showed that the preliminary reading of Germany’s manufacturing purchasing manager’s index was 54.9 for May, a six-month low compared to a final reading of 56.8 for the previous month.

The preliminary reading of the services PMI fell to an eight-month low of 54.9, from a final reading of 56.8 last month.

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