TOKYO: The Nikkei benchmark is set to fall on Wednesday for a third straight day, hurt by renewed strength in the yen and euro zone debt woes, but the benchmark's 25-day moving average is likely to hold.
The dollar fell 1 percent to 79.42 yen and the euro dropped 1.4 percent to 110.98 yen overnight.
"People are now used to seeing the dollar dipping below 80 yen, but the question is whether this strong yen trend is temporary or is it one that lasts for a while," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
"If it lasts for a week, the Nikkei may fall towards 9,500."
Miura added that the index's immediate support level is seen at its 25-day moving average of 9,696, and it is expected to hold on Wendesday.
Moody's cut Ireland's credit rating to junk on Tuesday, warning that the debt-laden country would likely need a second bailout, while European officials, for the first time, refused to rule out default by Greece.
Investors fear the crisis could overtake the bigger European economies of Spain and Italy.
Nikkei futures in Chicago ended at 9,810, down 110 points from their Osaka close of 9,920.
The benchmark Nikkei shed 143.61 points to close at 9,925.92 on Tuesday. The broader Topix index fell 1.5 percent to 857.19.
Analysts said that the index is expected to trade between 9,700-9,850 on Wednesday.
Copyright Reuters, 2011
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