(Reuters) - The yen rose to a 15-year high against the dollar and a nine-year peak versus the euro on Tuesday amid fears the global economy is slowing, testing Japanese authorities' resolve to stem the currency's climb.
The yen's rise accelerated as stop-loss sales were triggered in euro/yen at around 107 yen, while traders cited macro hedge-fund selling of the euro against the dollar.
Weaker stock markets helped buoy the yen on the crosses while narrowing differentials between U.S. Treasuries and Japanese government bond yields dragged the dollar down against the yen.
Japanese Finance Minister Yoshihiko Noda declined to comment on the chance of currency intervention, saying only that recent currency moves were one-sided and disorderly moves could harm the stability of the economy and financial system.
Traders took those comments as a sign the authorities were not yet ready to act to curb yen strength.
Unless the Japanese step in with something more definitive, we will see speculative accounts drive the dollar/yen down to 80 yen, said Paul Robson, RBS Global Banking currency strategist.
The 85 yen level was pretty important and now with that gone, dollar/yen falling to 80 is a real possibility. That will hurt the Japanese economy pretty hard, unless they do something more on the fiscal side or resort to more quantitative easing.
The greenback struck a 15-year low of 83.72 yen on EBS before inching back up to 84.02 yen in New York trading, but was still down 1.3 percent on the day.
The Bank of Japan missed some good opportunities to try to put a stop on the yen's rise. But now, with the worsening of the prospects for a global economic recovery, demand for the currency will just keep getting higher, said Joe Manimbo, a currency trader at Travelex Global Business Payments, in Washington D.C.
The euro fell to 105.44 yen, its lowest since November 2001, having dropped past support at around 107.27 yen, the low hit in June. It was last at 106.37 yen, down 1.2 percent on the day.
Technical analysts say the euro could be poised for a fall toward 105.00 yen, with interim support seen at 105.50 yen, around the low reached in September 2001. The 105.00 yen level, where Japanese authorities were reported to have intervened in November 1999, was also seen providing support.
The euro also fell to a six-week low against the dollar of $1.2602, opening the way to a fall toward $1.2522 and then $1.2479, which are daily lows from July.
Traders said the chances Japanese authorities would take fresh measures in the coming weeks to stem the yen's rise had increased, particularly as the dollar approaches 80 yen.
Sources said the yen's surge on Tuesday had somewhat increased the previously negligible chances the Bank of Japan will ease monetary policy before its rate review next month.
Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa discussed the yen by phone on Monday, but Kan did not ask the central bank to ease monetary policy further, and the two did not touch on currency intervention.
Japanese policymakers will be desperate to prevent a break in dollar/yen down to 80 but that looks the trend, Chris Turner, head of fx strategy at ING, said in a note.
(Additional reporting by Anirban Nag in London; Editing by tktk)