US dollar traded close to session highs versus the Japanese yen on Wednesday in expectation of the crucial congressional testimony by Federal Reserve Chairman Bernanke later today.
USD/JPY hit a session high at 99.82 at 7:40 GMT, after which consolidation followed at 99.69, still up by 0.59% for the day. Support was likely to be received at July 12th low, 98.66, while resistance was to be encountered at July 15th high, 100.47.
Market players positioned ahead of the semi-annual testimony by Ben Bernanke amid speculation, regarding the timing of a possible scale back to the Federal Reserve Banks Quantitative Easing. Bernanke was expected to reiterate that the central bank could begin tapering its bond purchases by the end of this year, in case US economy continues to revitalize and meets policymakers goals.
Meanwhile, earlier on Wednesday the minutes from Bank of Japans meeting on June 10-11th revealed that one member of the banks governing body expressed concerns over the possible side effects, which a loose monetary policy, applied in a longer term, could bring about. If economy finds itself in a situation, in which it could be difficult to achieve price stability within a two-year period and market expectations of a prolonged qualitative and quantitative easing increased, this could lead to economic instability in a mid and long term. Bank of Japan policymakers suggested that Japanese bond market volatility has diminished and there was no need the period of monetary easing to be extended above 1 year.
Elsewhere, the yen traded lower against the euro, as EUR/JPY cross advanced 0.50% to reach 131.11 at 8:41 GMT.
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