The yen fell against the dollar in early trading on Thursday, reversing course after a surprise rise overnight that traders and analysts immediately attributed to intervention by Japanese authorities.
The yen fell 0.80 percent to 155.73 per dollar by 0537 GMT, having slid by about half its late Wednesday high to 153 from around 157.55 in about 30 minutes.
The sharp overnight move came during a quiet period in markets, coming after Wall Street closed and hours after the Federal Reserve concluded its monetary policy meeting.
The dollar was already lower as Federal Reserve Chairman Jerome Powell reiterated the central bank's dovish bias, although he reiterated that interest rate cuts could take some time given persistent inflation.
Japan's Vice Finance Minister for International Affairs Masato Kanda, who oversees currency policy, told Reuters he had no comment on whether Japan intervened in the market.
The dollar has risen more than 10 percent against the yen since the start of the year as traders expect the first U.S. interest rate cut to be delayed, while the Bank of Japan has signaled it will proceed slowly with tightening policy after raising rates for the first time since 2007 in March.
The gap between long-term government bond yields in the two countries is 376 basis points. That helped send the dollar to a 34-year high of 160.245 yen on Monday, followed by a sharp decline that official data attributed to Japanese authorities’ intervention totaling about $35 billion.
The finance ministry likely intervened in the currency market to signal that it sees 160 yen per dollar as its upper limit, Takatoshi Ito, a Columbia University academic and former finance ministry executive, told Reuters in an interview on Thursday.
The dollar index, which measures the currency's performance against the yen, the euro and four other major currencies, was little changed at 105.70 points on Thursday after falling 0.56 percent on Wednesday from its highest level in nearly six months.
The euro was at $1.07175 after rising 0.45 percent in the previous session.
The pound rose 0.06 percent to $1.25345 after rising 0.28 percent on Wednesday.
As widely expected, the U.S. central bank left interest rates unchanged on Wednesday, with Powell stressing that it would take longer than previously expected for policymakers to feel confident that inflation would resume its decline toward its 2 percent target. At the same time, he described the risk of further rate hikes as unlikely.
The Australian dollar rose 0.23 percent to $0.6538. The New Zealand dollar was steady at $0.5930.
