Yen Declines on Speculation This Week’s Gains Were Excessive

By Ron Harui

April 21 (Bloomberg) -- The yen weakened against the euro and fell against the dollar as technical indicators showed the Japanese currency’s recent gains were excessive.

The yen pared the past week’s advance versus the 16-nation euro to 3.2 percent as the European currency’s 14-day stochastic oscillator against Japan’s dropped to 8 today, below the 20 level that signals the euro may have fallen too quickly and is poised to strengthen.

“There’s a sense the yen has been overbought,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest bank. “Market participants are probably unwinding long yen positions.” A long position is a bet an asset will gain.

The yen dropped to 126.94 per euro as of 10:25 a.m. in Tokyo from 126.48 in New York yesterday. It earlier reached 126.09, the strongest level since March 16. Japan’s currency declined to 98.18 per dollar from 97.89.

The dollar traded at $1.2929 per euro from $1.2921 yesterday, when it reached $1.2889, the highest level since March 16. The U.S. currency was at $1.4532 versus the British pound from $1.4539.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.