The Japanese yen dropped to the lowest level in the week against the euro on the speculation that the continuing economic rebound will spur demand for the higher-yielding assets.

The Japanese currency also fell after the statement of Masaaki Shirakawa, the Governor of the Bank of Japan, that the possibility of the double-dip recession became lower. The 1.2 percent surge of the retail purchases in the U.S. is just another sign of the strengthening economic recovery. The appeal of the yen as the low-risk safe-haven currency decreases as the improving economic situation encourages the traders to turn their attention to the riskier higher-yielding assets.

EUR/JPY reached 127.58 as of 9:00 GMT today after it opened at 126.85.

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