The yen slid on Wednesday to an 11-month low against the euro and a six-month low against the dollar, while the euro hit its strongest in more than a year versus the dollar in anticipation of a eurozone rate hike. More losses were expected for the yen as investors such as macro hedge funds add to bearish bets, with the Bank of Japan looking set to lag other central banks in tightening policy.
The euro rose as high as $1.4317, its highest since late January 2010, with traders reporting steady buying by Asian central banks. Large option barriers cited at $1.4350 and $1.4400 could cap gains in the near term, however. The struggling Japanese unit was threatening to breach key long-term support levels against most currencies, having already fallen to a 2-1/2 year low against the Australian dollar.
The yen has slid since the first G7 intervention in a decade last month, stirring talk of a carry trade revival - a strategy of selling low-yielding currencies to fund investment in currencies with higher interest rates. The euro was up 0.8 percent at 121.70 yen, having hit an 11-month peak of 121.97, with stop-loss buying earlier in the session adding to its rise.
The dollar was up 0.2 percent at 85.12 yen, easing from highs on profit taking by Japanese retail investors. It scaled a six-month peak of 85.53 yen, having surged 12 percent from its post-World War Two record low of 76.25 yen hit in March, days after Japan's north-east was devastated by a massive earthquake and tsunami. The high-yielding Australian dollar surged to 88.68 yen, its highest since September 2008, with 90 yen seen as the next possible target.
The dollar also faced chart resistance, with a trendline drawn off its June 2007 peak around 124 yen now lying roughly around 85.65 yen. Its 55-week moving average comes in near 85.80 yen, followed by the dollar's mid-September peak at 85.94 yen. The euro was last up 0.5 percent at $1.4295.