The yen remained weak near the 160 per dollar level on Tuesday, keeping traders alert for any intervention by Japanese authorities to bolster the currency. Meanwhile, the greenback edged slightly higher in the broader market.
Bitcoin experienced losses after its worst day in over two months at the start of the week, partly due to outflows from bitcoin exchange-traded funds (ETFs), according to analysts.
The dollar rose by 0.04%, reaching 159.64 yen, hovering close to the 160 level that led to a significant 9.79 trillion yen ($61.33 billion) intervention by Tokyo in late April and early May.
Fears of another intervention kept traders cautious about challenging the key resistance level, resulting in the yen trading within a narrow range.
"The market is clearly nervous and very much on edge about this situation," said Chris Weston, head of research at Pepperstone.
"There are inherent risks in shorting the Japanese yen as a carry trade, which is exactly what the authorities want to highlight.
"The primary message is that currency speculators and those holding carry positions are on notice. If you maintain those positions now, you risk a 400 to 500-pip drop in the dollar/yen."
The yen's latest decline followed the Bank of Japan's (BOJ) June policy meeting, where policymakers disappointed investors who were hoping for an immediate reduction in the BOJ's substantial bond purchases.
Minutes from the meeting, released on Monday, showed the central bank considered the possibility of a near-term interest rate hike, with one policymaker advocating for an increase "without too much delay."
In the broader market, the dollar gained ahead of Friday's release of the U.S. personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure.
The pound edged down 0.01% to $1.2683, while the Australian dollar fell 0.02% to $0.6655.
Similarly, the New Zealand dollar slipped 0.04% to $0.6120, remaining close to an over two-week low reached last week.
Politics were also on investors' minds, with the first U.S. presidential debate between President Joe Biden and former President Donald Trump scheduled for Thursday, and the French elections set to begin this weekend.
The euro, which has faced pressure due to political turmoil in France following President Emmanuel Macron's unexpected snap election call earlier this month, inched up 0.01% to $1.0734.
Despite this, the euro was on track for a monthly loss of about 1% due to the political instability.
The dollar stabilized at 105.49 against a basket of currencies.
"France's election will start on June 30, so the EUR will be affected by political concerns," said analysts at Sumitomo Mitsui Banking Corporation (NYSE) in a note. "If the political uncertainty continues, the EUR will weaken further against the USD."
In the cryptocurrency market, bitcoin rose roughly 1.5% to $60,349, recovering some of its sharp 6.65% fall from the previous session and hitting an over one-month low.
"We've seen a drawdown and six consecutive days of fund outflows from the bitcoin cash ETFs," said Pepperstone's Weston.
"Bitcoin, in my view, is a momentum vehicle, and momentum works both ways. When it's moving in one direction and the rate of change is accelerating, it's best to step aside and let the selling happen until it finds a base. Currently, the momentum is downward."
Paraphrasing text from "Reuters" all rights reserved by the original author.
