SINGAPORE- The dollar attempted to break above the key 160 yen level on Tuesday but with little success as fears of currency intervention from Japanese officials kept the yen marginally supported against its peers.
Elsewhere, bitcoin recovered some lost ground after its worst day in over two months at the start of the week, in part due to flows out of bitcoin exchange-traded funds (ETFs), analysts said.
The dollar was last 0.08 percent lower at 159.42 yen having traded in a tight range throughout the Asian session as traders were leery of testing the key resistance level that had prompted a 9.79 trillion yen ($61.33 billion) currency intervention from Tokyo in late April and early May.
That prevented the yen from notching fresh lows against other currencies, with sterling sitting just below a 16-year high at 202.38 yen
The Aussie similarly retreated from a 17-year top against the yen and last stood at 106.21
“The market is showing … that they are nervous, and they are very much on edge about this situation,” said Chris Weston, head of research at Pepperstone.
“There are inherent risks to being short the Japanese yen now as a carry trade, which is of course what (authorities) want to see.
“The first port of call is to tell currency speculators and people holding for carry that you’re on notice, if you hold those positions now, you run the risk of a 400-, 500-pip drop in dollar/yen.”
The latest decline in the yen has come on the back of the Bank of Japan’s (BOJ) June policy meeting, where policymakers disappointed investors who were betting on an immediate reduction of the BOJ’s massive bond purchases.
Minutes of the meeting out on Monday showed the central bank debated the chance of a near-term interest rate hike with one policymaker calling for an increase “without too much delay”.
