Yen slumps in Asia

The yen fell broadly and slumped to a two-week low against the dollar on Friday after a major earthquake struck Japan and triggered a slide in Japanese shares. The dollar climbed to as high as around 83.29 yen, the dollar's highest since February 22, rising from around 82.80 yen on news of the quake, which the US Geological Survey said was measured at magnitude 8.9.
Tokyo shares extended their losses, and JGB futures surged after the earthquake. The dollar last stood at 83.15 yen up 0.2 percent from late US trade on Thursday. The euro climbed 0.4 percent against the yen to 114.84 yen. The euro rose 0.1 percent against the dollar to $1.3815, stabilising after steep falls in the previous session but it remained vulnerable to a sell-off if a eurozone summit later in the day fails to ease concerns about sovereign debt.
For now, the single currency remains on an upward bias in the short term on the technical charts. But it needs to stay above $1.3777, a touch higher than Thursday's low in order to maintain its bullish momentum. A daily close below $1.3777 would probably push the euro to $1.3591, a 38.2 percent Fibonacci retracement of the January to early March rally, analysts said.
Some analysts said a "buy-on-dips" strategy makes sense for the euro as the prospect of a series of rate hikes by the European Central Bank should underpin the currency this year. "Any disappointment with the policy response to the sovereign debt crisis should challenge the euro near term, especially as investors remain overly optimistic about the prospects of a resolution," said Gabriel De Kock, currency strategist at Morgan Stanley in New York.
"However, we expect broad-based gains after ECB rate hikes get under way, most likely in April." Eurozone leaders meet on Friday, ahead of a full 27-nation European Union summit on March 24-25, to tackle the region's debt crisis. There was some nervousness before Friday's meeting, but that has since dissipated as investors are not expecting any major announcement that could appease worries about the debt crisis. Traders are expecting sharp moves over the next 30 days with the European Union heads of state summit on March 24-25 and a possible rate hike by the European Central Bank in early April.