Yen hovers near seven-month high, dollar steadies

The Japanese yen reached a seven-month high against the U.S. dollar on Tuesday, with the dollar remaining steady against major currencies. This surge was attributed to increasing oil prices and rising U.S. Treasury yields, which kept investors cautious. The yen had gained nearly 5% since the previous week, driven by expectations of faster Bank of Japan policy tightening, potential repatriation of overseas funds by Japanese investors, unwinding of carry trades, and pressure from Washington.

The currency reached as high as 152.89 per dollar during Asian trading, surpassing levels seen during Japan's July intervention and marking its strongest point since February. The yen later retreated slightly, ending the session down 0.12% at 154.14 per dollar. Marc Chandler, chief market strategist at Bannockburn Global Forex, noted that the yen's strength appeared to be driven by market adjustments as it has been used as a funding currency for carry trades, with no signs of official intervention from Japan.