The dollar regained strength again in early trading on Wednesday, achieving slight gains after previous losses due to renewed bets on the Federal Reserve cutting interest rates this year, while the yen fell above 155 to the dollar, keeping the risks of intervention high by the monetary authorities in Japan.
The yen fell 0.3% to 155.16 per dollar, moving away from a record high of 151.86 hit last week on questionable Japanese government intervention to support the currency, Reuters reported.
Analysts said any intervention by Tokyo in the currency would only be a temporary truce for the yen, given the continued large interest rate differentials between the United States and Japan.
Bank of Japan Governor Kazuo Ueda said on Wednesday that the central bank may take monetary policy action if the yen's decline significantly affects prices.
Meanwhile, Japanese Finance Minister Shunichi Suzuki reiterated his warning that authorities are ready to respond to excessively volatile moves in the currency market.
In terms of other currencies, the euro fell by 0.13% to $1.0741, while the New Zealand dollar fell by 0.17% to $0.5992.
The dollar index, which measures the greenback against a basket of currencies, rose 0.18% to 105.6, above a nearly one-month low hit last week.
Investors continue to focus on the pace and timing of the Fed's rate cuts that are likely to drive currency moves, following U.S. jobs data that boosted expectations for rate cuts.
Minneapolis Federal Reserve President Neel Kashkari said Tuesday he doesn't rule out raising interest rates as the central bank's next move, saying recent inflation data raises questions about whether monetary policy is restrictive enough to meet the central bank's 2% target.
Rodrigo Catril, chief foreign exchange strategist at National Australia Bank, said markets shrugged off comments from the Minneapolis Fed president, who is leaning toward hawkishness, which is unlikely this year.
Sterling fell 0.18% to $1.2487, ahead of the Bank of England's policy decision on Thursday, when focus will be on when the bank might start cutting interest rates.
The Australian dollar slipped 0.33% to $0.65765, partly influenced by a less hawkish outlook from the Reserve Bank of Australia, after it held interest rates steady on Tuesday.
