The yen hit a seven-month low against the dollar on Wednesday and looked set to stay under pressure after recent monetary easing in Japan, while the euro struggled against the greenback as markets assessed implications of Greece's bailout deal.

The dollar hit a peak of 80.37 yen, its highest level since mid-July, with traders citing buying by Japanese importers and offshore players. This took it beyond highs hit in October and August after Japanese authorities took steps to curb yen gains.

The yen has been on the defensive since the Bank of Japan's surprise move to boost its asset buying program last week. Some analysts said the move could mark the end of the yen's long-term uptrend that prompted Japan to intervene in the currency market three times last year.

Comments from a Japanese Ministry of Finance official that there was still a risk of the yen rising, and that Japan would continue to monitor currency moves carefully and would respond as needed, added to broad yen weakness.

The initial rebound in our view is a position adjustment following the BoJ's announcement of their shift in policy, said Ian Stannard, head of European FX strategy at Morgan Stanley.

The sustainability of that move is a function of whether we see a change in the behavior of Japanese investors. A rise in U.S. rate expectations would be a trigger point for another sharp move higher.

Further gains could be hard-won, with exporters looking to sell into a stronger dollar. The dollar faced resistance around 80.38 yen, the July 12 high, with traders reporting demand to sell around that level and ahead of an options barrier at 80.50 yen.

Morgan Stanley recommended selling the dollar at 80.40, targeting 77.75, but with a tight stop loss order at 80.65 yen.

If we start to move above that level we will probably switch to bullish strategies, said Stannard.

The dollar has risen roughly 5 percent against the yen so far in February, putting it on track for its biggest monthly percentage gain since March 2010.

In addition to the BOJ's monetary easing, the yen has come under pressure after data showed that Japan's current account surplus -- a major and constant support for the yen -- fell to a 15-year low last year.


The euro rose to a three-month peak against the Japanese currency of 106.33 yen, its highest since mid-November, and was last up 0.55 percent at 106.13 yen.

But it retreated from near two-week highs against the dollar hit the previous day as optimism over the long-awaited Greek bailout deal reached early on Tuesday gave way to concerns about economic growth and implementation risks.

The euro was steady at $1.3241, below Tuesday's high of $1.3293, its highest level since February 9. It faced resistance at $1.3306, the 100-day moving average. Since late January the euro has traded in a range roughly between $1.30 and $1.33.

The euro also came under pressure from surveys showing the euro zone economy in danger of falling into recession as services sector activity shrank along with manufacturing.

But it rose to a two-month high against sterling of 84.42 pence as the UK currency fell after Bank of England minutes showed two votes for larger asset purchases this month, increasing the risk of more easing later this year.

Market attention was also focused on the European Central Bank's next long-term refinancing operation next week. The ECB is expected to lend nearly 500 billion euros to banks, although some forecasts were as high as 1 trillion.

If the take-up is higher I think the euro goes up on that, it plays on more liquidity being positive for risk appetite. We could see it the other side of $1.35, said Adam Cole, global head of FX at RBC Capital Markets.

But there's an equally large camp that believes LTROs are close enough to quantitative easing to be more currency-negative the larger they are.